Case Study

Elizabeth Gardens in Miami, FL

6 min read

Low Interest Rates Spur Florida Workforce Rehabs

Low interest rates are enabling refinancing on multifamily projects that can free up money for developers to use on additional affordable and workforce housing production.

An example of this is Elizabeth Gardens in Miami, FL. Two years ago, this 140-unit project was a distressed asset and stood totally vacant. Since being acquired by a manager and developer, it has been rehabbed and is now 100 percent occupied. And since the project is on property that has space to create more units, a recent $16.3 million refinance loan from Bayview Asset Management is freeing up equity that could, if the developer wished, be used for further development.

Jesse Wright, director of JLL Capital Markets, which arranged the loan for Elizabeth Gardens of Miami LLC and advised them through the transaction, says of workforce/working class housing in Miami, “There’s definitely a major need for it. Most of the new apartment product being built today is in the luxury segment. There are not a ton of groups focused on delivering new product in that space or refurbishing older product in the workforce area. There’s certainly a major need among the population expansion the area is seeing.”

And, as the macro dynamics of the Miami area economy are currently “so strong,” it is fueling demand for more workers, he says. Up to two-thirds of Miami’s rental workforce fits this category. And there is definitely a “bullish response” by the capital markets for this field in particular, he says.

“There’s so many good headlines about tech and finance, all these new and exciting employment drivers. The city has a lot going for it right now,” he says. “I don’t think we’re alone in thinking this is a pretty robust market segment.”

The financing JLL arranged for the property was a three-year bridge loan with two one-year extensions “at a very attractive rate,” the Miami-based Wright says. “The loan retired some sponsor equity, but not all of it.”

With a low cost of capital from lenders, Wright says, and recouping some of the original equity, this kind of creative flexibility would allow for “phased redevelopment down the road. I think they now have the time to pursue the intermediate steps.

“I think that’s something this sponsor was certainly aware of,” he says. “This loan allows them to pursue this sort of strategy down the road.”

Bread and Butter Loans
These kind of bridge loans, particularly multifamily bridge loans “are really bread and butter for me,” Wright says, estimating that JLL will close hundreds of millions of dollars in that space this year. “That’s a market segment that has been on fire” as lenders have seen their cost of capital drop dramatically this year, especially coming out of COVID.

The refinancing allowed Elizabeth Gardens of Miami to do a “pretty extensive” rehab for basically all the units at the property, replacing air conditioners and re-doing kitchens and floors.

“A lot of it was really deferred maintenance” on the vacant units, he adds, bringing them and the property back to a state where they were habitable “and then making them nice from there. When they bought it, it was basically unlivable,” he says.

Although the project does not have a Department of Housing and Urban Development Housing Assistance Payments (HAP) contract, many of the tenants do have subsidies as the property is Section 8-eligible.

“That’s due in large part to the sponsor’s efforts,” he says. “The sponsor’s investment in this neighborhood has enhanced its workforce housing stock at a time when many areas are in an affordability crisis,” says Wright.

He says he feels this kind of project is one the sponsor will spend more and more time on going forward.

The garden-style Elizabeth Gardens consists of an 11.7 acre site with studio, one-, two- and three-bedroom apartment units and about 18,000 square feet of commercial space. It is said to have a good location in Miami’s West Little River neighborhood near major transportation access, including Miami International Airport, Miami-Opa Locka Executive Airport and Interstate 95, which has an on-ramp at a distance of about two miles. The property is adjacent to NW 27th Avenue, a major Miami north-south artery.

According to RentCafe, rents at Elizabeth Gardens range from $850 to $950 for a studio to $1,700 for a three- bedroom. There is no specific area median income limit for rent eligibility.

JLL, a Fortune 500 company with annual revenues of $18 billion, is a brand of Jones Lang Lasalle Inc., and it specializes in real estate and investment management. Wright and managing director Jim Dockerty handled the transaction for JLL.

Agency Multifamily Loans
On the multifamily side, JLL specializes in agency lending products from Freddie Mac, Fannie Mae and the Federal Housing Administration, including the Fannie Mae M.TEBs, the Freddie Mac TEL (tax-exempt loan) and the FHA 221(d)4. JLL also does Low Income Housing Tax Credit deals.

The principals of Elizabeth Gardens of Miami LLC, Lisa Ramos and Lisette Nunez, have specialized in acquiring, stabilizing, managing and disposing of bank-owned real estate. They have more recently grown into full-scale development and investing.

Describing one of their companies, they wrote, “Under Urban Point Properties, Lisa and Lisette purchased vacant land throughout Florida and obtained development rights and other entitlements, working directly with legal, architectural and land-planning teams to produce a full development package. Once completed, the development packages were sold to other developers.

“Under Stone Pine,” (another company of theirs) “Lisa and Lisette acquired smaller parcels in the Miami submarkets of Coral Gables, Key Biscayne, Pinecrest, Palmetto Bay and Homestead, as well as numerous condominium conversion projects.”

Coral Gables, FL-based lender Bayview Asset Management, which has $15 billion in assets under management, describes itself as “focused on investments in mortgage and consumer credit, including whole loans, asset-backed securities, mortgage servicing rights and other credit-related assets.”

The loan was closed by its affiliate, Oceanview Life and Annuity Co. Bayview Asset Management was represented on this deal by Marco Lainez and Kyle Rowe.

Story Contact:
Jesse Wright, Director, JLL Capital Markets, Miami,

Mark Fogarty has covered housing and mortgages for more than 30 years. A former editor at National Mortgage News, he has written extensively about tax credits.