Miami developer Pedro Martin hopes to gain control of 120 acres in Doral — and head off competitors — by funding a developer’s plan to exit Chapter 11 bankruptcy.
Martin’s Terra World Investments would lend up to $20 million to Town Center at Doral in exchange for the land. The money would help pay the expenses of Town Center and its affiliates and go toward paying off creditors.
Town Center was initially planned as a mixed-use project during the housing boom but never got built. Developer Elie Berdugo secured site plan approvals for the project before he died in 2008, the same year as the real estate and financial collapse.
Town Center, proposed northeast of Northwest 107th Avenue and 58th Street, was to include 1,109 residences, 230,000 square feet of light industrial space and 188,000 square feet of retail and office space.
Terra’s strategy of jumping into the bankruptcy action to take control of land is rare, according to several real estate experts. In most cases, investors wait for a bankruptcy auction to buy the property, said Robert Kaplan, the Florida partner of New York-based Ackman-Ziff Real Estate Group, a real estate investment banking firm.
Terra may have chosen the less-traveled path to position itself for what could be an uphill battle with a secured creditor owed $71.5 million.
The Landmark at Doral Community Development District is suing Town Center in Miami-Dade Circuit Court to take title to the land. The two-year foreclosure case was put on hold in September after Town Center and its affiliates filed for bankruptcy protection.
Landmark at Doral was created in 2006 to fund the project’s infrastructure.
On Tuesday, Terra and the CDD will face off before U.S. Bankruptcy Judge Robert A. Mark in Miami. The district wants Mark to allow the foreclosure to move forward, arguing the debtor doesn’t have the money to protect the asset and the property doesn’t have any equity to help fund any potential reorganization plan.
The assessed value of the assembled site is $36.3 million, according to court records.
The total debt backed by the land is about $200 million, including $71.5 million owed to the district and a $103 million defaulted construction loan. The loan, granted by the defunct AmTrust Bank, is owned by a partnership of investors including Horsham, Pennsylvania-based home-builder Toll Brothers, according to court records.
Terra wants the judge to approve its proposal to fund a reorganization plan. Terra maintains its investment would help improve the value of the asset and help pay back creditors.
Miami attorney Patricia Redmond, who represents the district, said Town Center and Terra haven’t discuss the proposal with the district.
“Right now, we wish to go forward with the foreclosure,” said Redmond, a shareholder with Stearns Weaver Miller Weissler Alhadeff & Sitterson.
Noah Breakstone, who represents the investment group that owns district bonds, said he hasn’t talked to Terra and declined further comment. Breakstone, a principal of Coral Gables-based BTI Developers, buys CDD bonds across the state.
Miami bankruptcy attorney Thomas Lehman, who is not involved in the case, said the CDD mortgage could present challenges to Terra.
“The CDD would have a strong position given that it claims a $71 million first lien that would enable it to be a competing bidder in any sale of the debtor’s assets or to vote to reject a proposed plan of reorganization,” he said.
Lehman said Terra might have chosen its route because a public sale would allow the CDD to credit bid the full amount of its debt and take title to the property without any money down. In this case, the district’s bid would be higher than the market value of the land.
For Terra’s strategy to work, it would need to gain the approval of the district, said Lehman, a partner with Levine Kellogg Lehman Schneider & Grossman in Miami.
“The idea is to come up with enough money to treat the CDD claim and try to get them to accept the plan,” he said
Martin and its affiliates have been acquiring large tracts of land in Doral for months.
In September, a Terra affiliate bought 35.5 acres of industrial land southwest of Northwest 102nd Avenue and 74th Street. Terra Acon Doral Palms paid $16.5 million for the property that had been the subject of a U.S. Century Bank foreclosure action.
In August, Terra Acon Doranda Developers paid $9 million for 17 acres northwest of Northwest 58th Street and 104th Avenue.
Terra, in partnership with Doral-based Shoma Homes, is planning to build Las Ramblas Country Club, a 250-acre community of single-family homes, on Fontainebleau Boulevard and Northwest 97th Avenue. Homes are being marketed from the $300,000s.
Miami real estate adviser Kaplan said the appetite for large parcels in Doral has increased tremendously over the last year.
At the height of the recession, nobody wanted to touch land and values plummeted. But now, home-builders are back in the game trying to snatch future sites for single-family communities, said Kaplan, who is marketing a 48-acre site in downtown Doral for sale or joint venture. The property owner is an affiliate of Shoma Homes. The site, which Kaplan is marketing together with Miami-based Blanca Commercial Real Estate, is approved for retail, apartment and hotel uses on Doral Boulevard east of Northwest 87th Avenue.
“Any significant land parcel that comes available is sought after by home-builders,” he said. “Doral is hot.”
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