Boca Property Developers Court Younger Crowd
The Wall Street Journal
Published on 10.10.2017
It takes the perfect blend of colorful history, superb location, iconic architecture and an elite, sophisticated citizenry to create an international destination – a place where every moment is a celebration. This is the essence of Via Mizner, an exclusive, landmark address in the heart of a beloved community, perfectly crafted for world-class lifestyles.
As one of a select few locations worldwide with a residential property bearing the Mandarin Oriental name, The Residences is truly a signature address. Upon arriving at the private entrance lobby, the cascading water element and grand staircase only hint at the striking design and details that abound throughout. Incomparable sophistication is imbued into each of the eighty-nine, light-filled homes that celebrate the Boca Raton lifestyle with absolute comfort and complete security.
For over fifty years, Mandarin Oriental Hotel Group’s reputation for impeccable service, distinctive designs and renowned, holistic spas has been key to its rapid expansion across the globe. Today, the company operates thirty-two hotels and seven Residences at Mandarin Oriental in 23 countries and territories. A dedication to the highest levels of customer satisfaction year after year has garnered Mandarin Oriental Hotel Group a most enviable ranking as a recognized leader in worldwide luxury hospitality.
For years Boca Raton, Fla., was known by most people as the retirement town of Jerry Seinfeld’s parents on the hit television show.
Now developers are appealing to a younger crowd. In recent years they have rolled out rental housing, retail and nightlife targeting people who are more into fine dining than early-bird specials.
Downtown Boca Raton is getting its first new luxury hotel in decades. Penn-Florida Cos., a developer in the state for three decades, has obtained $318 million in debt financing for a 2 million square foot project that includes a 164-key Mandarin Oriental Hotel & Resort.
Penn-Florida secured the financing from Mack Real Estate Credit Strategies, a three year old firm that has become an active so-called nonbank lender. These lenders have been focusing on construction financing and other riskier loans that many traditional banks are reluctant to make.
Penn-Florida’s project, named Via Mizner, includes the planned Mandarin hotel, a recently-completed 366-unit rental apartment building, 88 condominiums and 60,000 square feet of retail. The rental building, which opened last year, is about 50% leased, according to Mark Gensheimer, chief executive of Penn-Florida.
Mr. Gensheimer said that when his company acquired the site for Via Mizner in 2007 he wasn’t considering a rental building. But since then, “The entire country has changed its perspective on renting versus owning,” he said. “People that have the choice of either renting or owning have chose to rent for the lifestyle.”
The U.S. homeownership rate hit 63.7% in the second quarter, the Census Bureau said. That is well below the historical average but up nearly a full percentage point from a year ago, when it touched a 50-year low of 62.9%.
Via Mizner’s website lists studios starting in the $1,639 a month range and three bedroom units that run as much as $6,055 a month.
Demand for hotel rooms in the area has been rising. The occupancy rate in the Boca Raton/West Palm Beach market was 74.9% for the first eight months of the year, up 0.7% compared with the same period last year, according to data firm STR Inc. The average daily rate was $178.23, up 0.8%, the firm said.
But it isn’t as if Morty and Helen Seinfeld would no longer feel at home in Boca Raton. More than 39% of the population was over 55 years old in 2015, roughly the same as 2010, according to the city’s website. The country club lifestyle still appeals to many. Siemens Group is developing a 139-unit condominium named Akoya Boca West in a private club community. About 50% of the units have sold, according to Rob Siemens, a vice president.
The loan from Mack Real Estate provided funds to refinance the Via Mizner rental building, develop the Mandarin hotel and replace a land loan that had been on the parcel where the condominium is going to be built. The interest-only floating rate loan with a term of close to four years is designed to give the developer enough time to stabilize the project and obtain longer-term financing.
Penn-Florida selected Mack partly because principals of the firm have extensive experience in development and understood the different dimensions of the Via Mizner plan. “They treated this as a partnership as opposed to a lender putting a term sheet out and saying: here’s what we can do,” said Faisal Ashraf, chief executive of Lotus Capital Partners, which arranged the financing.
Mack Real Estate was formed by William and Richard Mack, a well-known investment team that was active in such ventures as private-equity firm Apollo Real Estate Advisors, and Peter Sotoloff, who was head of debt originations for Blackstone Group LP. The firm expects to originate close to $4 billion in loans this year, Mr. Sotoloff said.
Banks and other traditional lenders have become more active in making first mortgages on stabilized properties and other less-risky assets. But they have had less of an appetite for construction loans which pay higher interest rates but also are more risky, finance experts say.
Nonbank lenders “are basically saying there are gaps in lending after the financial crisis and we can establish pools of capital that lend in a manner that still make real estate work,” Mr. Ashraf said.
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An offering is made only by the prospectus for the condominium and no statement should be relied upon if not made in the prospectus or in the applicable purchase agreement. Douglas Elliman is the Developer’s exclusive broker for this project. No solicitation, offer or sale of a unit in the Residences will be made in NY, NJ, or in any other jurisdiction in which such activity would be unlawful.Via Mizner Owner III, LLC (“Developer”) is a newly-formed entity, which is the sole offeror of the units being offered for sale as The Residences at Mandarin Oriental, Boca Raton (“Residences”). Penn-Florida Capital Corp. and the other “Penn-Florida Companies” are affiliated with the Developer but are not the developer of the Residences. All statements and any representations herein shall be deemed to have been made solely by Developer. An affiliate of the Developer is developing the adjacent proposed Mandarin Oriental, Boca Raton hotel (“Hotel”) and the rental programs, if any, offered to unit owners in the Residences. Neither Mandarin Oriental Hotel Group nor any of its affiliates, nor their respective Officers, Directors, Agents or Employees (collectively, “MOHG”), are in any way owners, offerors, promoters, issuers or underwriters of, or responsible or liable for, or are making any representations or warranties with respect to, the Developer, construction of the Residences, any offering for sale of the real property constituting the Residences, or any increase or return on related investment. MOHG has not assumed and has no liability or responsibility for any financial statements, projections or other financial information contained in any sales and marketing materials, prospectus or similar written or oral statements relating to the Residences. Developer has the sole right and responsibility for the manner and means by which the Residences are sold, and for all representations in relation to the Residences. Developer has obtained rights to use the “Mandarin Oriental” name and trademarks (“MOHG Marks”) in connection with the Residences and the Hotel subject to the terms and conditions of non-exclusive license agreements which may be terminated at any time upon certain occurrences. The right to use the MOHG Marks in connection with the Residences is thus not guaranteed and no such right is included in the Residence being acquired by any purchaser. If any of the relevant agreements are terminated, or Mandarin Oriental ceases to manage the Hotel or Residences for any reason, use of the MOHG Marks in connection with the Hotel and Residences may be terminated at MOHG’s discretion.
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Photographs and artwork are lifestyle photographs and conceptual artist renderings.