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CMA
August 10, 2018  

Debt Sought for Expanding South Florida Mall

The owner of the top-performing retail center in the U.S. is seeking some $600 million of debt to refinance and expand the property.

The mortgage would be backed by the 460,000-square-foot Bal Harbour Shops, a luxury open-air mall just north of Miami Beach. Some of the proceeds would go toward financing a project that would add more than 340,000 sf in phases over about five years.

The owner, Whitman Family Development of Miami Beach, is talking to a wide cross-section of lenders. It’s seeking a seven- to 10-year mortgage with most or all of the proceeds funded at closing. More typically, construction would be financed with a short-term loan that is drawn down as the project proceeds. But in this case, the existing property produces sufficient cashflow to easily support the entire proposed debt.

One advantage of that approach is that it allows a wider group of lenders to compete for the assignment — including commercial MBS shops, which can’t securitize unfunded loan commitments.

It’s unclear how much debt is currently in place on the mall. In February it was reported that a group of banks led by SunTrust had provided a $150 million loan in connection with the planned expansion. That may have been a bridge loan or a short-term facility that would be extinguished when the new mortgage is secured.

Bal Harbour Shops was developed in 1965 in the affluent village of Bal Harbour, at the northern tip of the Miami Beach barrier island. It’s been renovated and expanded several times over the years. The Whitman family purchased an adjacent parcel owned by a church six years ago for the planned addition. The project was delayed for several years by local opposition. The village granted final approval for the expansion last year as part of a deal that entails the Whitman company handing over some land to the village and footing the costs for a new municipal building, parks and arts programs.

The eventual cost of the expansion has been put at $400 million. The plans include adding space to the existing buildings, which are set around heavily landscaped interior spaces, as well as constructing a new wing and more parking facilities. Barneys New York has signed on to take 53,000 sf of the new space for its first location in the Southeastern U.S.

The existing tenant roster at Bal Harbour Shops is a who’s-who of luxury retailers that includes Chanel, Dolce & Gabbana, Harry Winston, Neiman Marcus, Saks Fifth Avenue and Versace. Research firm Green Street Advisors ranks the property as the nation’s best-performing mall, with sales of about $3,300/sf.