Rockwood Capital and Partners Snap Up 849-Unit Miami Luxury Condo for $141M

By Barbra Murray, Contributing Writer

Miami–Everglades on the Bay, a mixed-use luxury condominium property in Miami, has just traded for far, far below replacement cost. Rockwood Capital L.L.C., Duncan Hillsley Capital and Fortune Capital Management Services acquired the two-tower asset, which Cabi Downtown L.L.C. developed at a cost of approximately $300 million in 2008, for $141 million. The new owners have a long way to go before reaching full sell-out of the 849 residences, but they are confident that they will achieve their goals, and it’s a confidence that is backed by a few legitimate factors.

Sited along Biscayne Bay Boulevard in the blossoming arts and entertainment district of downtown Miami, Everglades consists of two 49-story high-rises that–in addition to upscale studios and one- two- and three-bedroom residences–feature 58,000 square feet of public retail space, and 100,000 square feet of amenities ranging from a 13,000 square-foot health club and spa to a private residential lounge. The property, designed by Fullerton Diaz Architects, also offers over 1,000 parking spaces.

It was Cabi’s bankruptcy reorganization plan that paved the way for Rockwood, acting on behalf of investors in one of its equity funds, and partners to grab Everglades at such a reasonable price. Cabi, having fallen victim to the credit crisis and housing collapse, defaulted on a Bank of America loan, which resulted in the transfer of the property’s title to lenders and Cabi’s transition from owner and manager to just manager.

Now, Everglades is under new management and Rockwood et al plan to invest a bit of capital to put a few finishing touches on the premier residential and retail complex, and delve into sales and marketing activities. The new ownership will have its hands full. At the close of the transaction, 184 of the condo community’s 849 units had officially sold. However, they who now hold the deed are not worried, partially because, indeed, size does matter.

“Most of the luxury condominium properties that were built here were built as large units, so they have large price tags; our units are smaller with smaller price tags, but we have comparable views and comparable amenities,” Tom Duncan, Duncan Hillsley Capital president, tells MHN. And, he says, there is a market for bay view condominiums with reasonable purchase rates. “We’ll have financing in place by spring and these condos can be bought by locals who live in the suburbs and are tired of the commute to downtown. But the primary mover of condos is offshore investors. Miami is the gateway to Latin America and many people come here for business or leisure year-round and want to have their own home. Our price point will be our advantage.”

And there is another reason for Everglades’ owners to be hopeful. In June, Florida’s governor signed into law the Distressed Condominium Relief Act, which went into effect on July 1. The Act “will support a more vigorous pace of bulk or fractured condo sales,” Marcus & Millichap Real Estate Investment Services notes in a fourth quarter report on Miami-Dade’s multifamily market, adding that, “under the law, buyers are shielded from liability from construction defects in properties they did not build.”

The improving economy and the renaissance of the downtown Miami area won’t hurt either.