Under Construction. Now selling the North Tower Collection.
More than $1B in loans closed in recent months, but financing environment remains tough South Florida developers scored a surge of more than $1.2 billion in construction loans in recent weeks, in stark contrast to other top regions across the country.
The financing comes even as high interest rates and soaring insurance premiums have held new developments hostage.
Much of the recently secured financing is for condo towers and some mixed-use projects. Another $1 billion-plus in South Florida condo construction loans are expected to close early this year, sources told The Real Deal.
Bank OZK remains the top lender for condo construction in the tri-county region. Of the top five loans to close since November totaling $1.1 billion, Bank OZK provided $718 million.
The largest loan in the past two months is the $259 million construction financing for The Ritz-Carlton Residences, Pompano Beach. Bank OZK provided the loan in December to Fortune International Group and Oak Capital for the luxury branded condominium project. At the end of the month, Ugo Colombo’s CMC Group secured a $239 million loan, also from Bank OZK, for Vita at Grove Isle, a waterfront condo building under construction in Miami’s Coconut Grove. The Ritz was more than 90 percent presold, while Vita was more than 70 percent presold at the time.
In South Florida, condo developers can use much, if not all, of their buyers’ deposits for construction, so banks and other lenders are more willing to finance projects with strong presales, experts say. The risk for lenders is lower.
But that doesn’t mean those deals are easy. Many of the loans represent smaller portions of the capital stack than they would have two or three years ago. If a lender was willing to provide 65 percent loan to value before, now they are offering closer to 50 percent, sources said. Some deals require multiple lenders so as to have less leverage than before.
For several projects, it’s now or never. Condo developers risk their presale contracts becoming invalid if they don’t move forward with construction.
