3650 REIT Originates $77M Construction Loan in South Florida – Multifamily Real Estate News

Royal Palm Cos. has secured a $76.5 million construction loan from 3650 REIT to finance the completion of Elevate Apartments, a 293-unit, eight-story multifamily property in Dania Beach, Fla.

The building at 560 E. Dania Beach Blvd. broke ground in the fourth quarter of 2021 and is approximately 45 percent completed. It is scheduled for delivery in November 2023. Royal Palm, a Miami-based development and management company, is partnering with developer Rafael Pecchio on the project.

The loan was originated by 3650’s Bridge and Event Driven platform and carries a term of 36 months. It was arranged by Kevin O’Grady, managing director of Concord Summit Capital and Royal Palm’s financial adviser.

Headquartered in Miami, 3650 is a nationwide commercial real estate lender originating and servicing portfolio loans for relationship borrowers. The Elevate Apartments is 3650’s second construction loan in Dania Beach. The first transaction was a $60.3 million loan for the development of the recently completed 301-unit Oasis Pointe multifamily development at 150 S. Bryan Road.

Royal Palm, which has developed or repositioned more than 6,000 units across 50 projects in Florida and has a $3.5 billion portfolio, was seeking funding to ensure timely completion of the project. Jonathan Roth, 3650 REIT co-founder & managing partner, said in a prepared statement the capital markets volatility has led many sponsors to revisit their capital stacks to ensure certainty of execution. Roth said 3650 was able to provide a fully capitalized debt structure to enable the project’s completion without disruption to the ongoing construction.

Daniel Kodsi, president of Royal Palm Cos., said in prepared remarks the company was familiar with 3650’s lending program due to their significant presence in Miami and pre-existing relationship with O’Grady. In July, Royal Palm and joint venture partner Forest Development received a $269 million construction loan for Nautilus 220, a 330-unit luxury condominium project in Lake Park, Fla., from Fortress Investment Group LLC. The financing was arranged by Concord Summit Capital. Construction is underway at the mixed-use property and slated for completion in the second quarter of 2024.

Elevate apartments details

Elevate Apartments will have studio, one- and two-bedroom units ranging in size from 700 to 1,000 square feet, many with ocean and nature preserve views. The property, which will have gated parking and electric car charging stations, will feature a resort-style swimming pool facing a nature preserve. It will also have a dog park, fitness center, 2,300-square-foot business center and resident coworking space as well as a rideshare pick-up and drop-off lounge.

The property is situated about 1.5 miles from the nearest public beach and abuts a 1,500-acre nature preserve with recreational offerings including walking and paddling trails. Elevate Apartments is located near dining, entertainment and major employment centers, including Dania Pointe, a 102-acre, mixed-use development with retail, lifestyle, dining and entertainment tenants that will also be the future home of Spirit Airlines’ headquarters. The multifamily community also has easy access to Fort Lauderdale-Hollywood International Airport and Interstate 95.

3650 REIT deals

Roth stated 3650 is a lender that does not employ leverage in its construction loan portfolio and so it is well positioned to provide debt capital in markets that are struggling for liquidity. He noted the team, which includes co-founders & managing partners Toby Cobb and Justin Kennedy, have been through multiple real estate cycles and are able to find strategic financing opportunities for fundamentally strong projects despite the current uncertain conditions.

In July, 3650 REIT provided a $170 million construction loan to Newgard Development Group for Lofty Brickell, a 44-story luxury condominium community in Miami. The firm also provided the financing for the land acquisition the previous year. Located in downtown Miami, construction was set to break ground this quarter. At that time, 80 percent of the inventory was under contract.

During the fall, the firm partnered with RREAF Holdings LLC and DLP Capital to acquire the Southeast Multifamily Portfolio III with a capitalization of approximately $500 million from Hamilton Point Investments.  RREAF spearheaded the acquisition efforts, but all three of the companies provided equity capital for the acquisition and also secured financing from Berkadia. The Southeast Multifamily Portfolio III includes 10 communities totaling more than 2,744 units and has properties in seven states.