MIAMI BEACH, FLORIDA. Boutique office/retail building steps from Lincoln Road

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1 MIAMI BEACH, FLORIDA Boutique office/retail building steps from Lincoln Road

2 HFF is pleased to exclusively offer the opportunity to acquire Meridian Center (the Property or the Building ), a boutique six-story 54,471 square foot mixed-use office and retail building located in the heart of Miami Beach, Florida one of the world s most cosmopolitan cities. Investment Highlights RARE SOUTH BEACH INVESTMENT OPPORTUNITY Real estate in South Beach is considered a generational investment for the area s few fortunate property owners. The Offering stands out as a rare opportunity to acquire a boutique office/retail building with value add opportunities and redevelopment upside located at one of South Beach s most coveted addresses. PROPERTY FACTS Building Address 1680 Meridian Avenue, Miami Beach, Florida Net Rentable Area 54,471 RSF Site Size 11,250± SF (0.258± acres) Location Steps from the world renowned Lincoln Road in the heart of South Beach Occupancy 84% Height Six stories, consisting of five floors of office space above ground floor retail space Parking The Property is adjacent to a City-owned parking lot and there are numerous nearby public and private parking garages Year Built 1957, with extensive renovations in 2005 HIGH PROFILE MERIDIAN AVENUE ADDRESS Meridian Center is situated on the high profile Meridian Avenue in the heart of South Beach and 400 feet from the world renowned Lincoln Road South Florida s mecca for high impact and internationally acclaimed retailers and restaurants. Meridian Avenue is rapidly becoming one of the most important streets in South Beach. Already home to Macy s, which is situated across the street from the Property, Meridian Avenue will be elevated to even higher prominence by two emerging projects. Lincoln Lane, which connects with Meridian just south of the Property, will see development of two high end multi-story retail buildings, moving more retail development closer to the Property. Additionally, the proposed $500 million redevelopment of the Miami Beach Convention Center will transform the surface lots fronting Meridian Avenue, just a block north of Meridian Center. 2

3 HIGHLY WALKABLE LOCATION WITH EXCEPTIONAL AMENITY BASE The Property is located one block north of Lincoln Road, which is often referred to as the Rodeo Drive or Champs-Élysées of South Florida. Meridian Center tenants value working steps away from over 150 of Miami s finest shops and restaurants including the Apple Store, H&M, Shake Shack, Starbucks, Victoria s Secret, Williams-Sonoma and Yard House. As result, Meridian Center enjoys an outstanding walk score of 89. Other nearby amenities include upscale hotels and day spas, Miami Beach City Hall, Miami Beach Convention Center, New World Symphony and The Fillmore. This extensive collection of retail and entertainment venues combined with the recent boom in luxury highrise construction has turned this South Beach neighborhood into a cosmopolitan 24-hour live, work and play area. SECURE IN-PLACE INCOME The Property s tenancy is high quality and diversified, providing secure in-place cash flow. There is minimal rollover as less than 38% of the rentable square footage rolls in the first five years. Major tenants Douglas Gardens and Keller Williams represent 42.5% of the building area and have 5.8 years of remaining lease term. STRONG MARKET FUNDAMENTALS Historically, the Miami Beach office market has demonstrated exceptional market fundamentals and consistently outperforms the other submarkets in Miami-Dade County. Class A office occupancy averages 97% with no new construction planned and no available land to accommodate new development. As a result, the Miami Beach market is poised for rapid rent growth far exceeding current average rental rates of $36.39 per square foot gross for Class A office space. The new owner of Meridian Center will have the opportunity to capitalize on this forthcoming rental rate growth and significantly increase in-place income over the coming years. SUPPLY CONSTRAINED, EXTREME BARRIERS TO ENTRY MARKET Protected historical districts have been established to preserve the integrity of the Art Deco and Miami Modern architectural styles for much of the area surrounding the Property. As a result, the office market is severely supply constricted with no new significant office developments planned for Miami Beach. Additionally, the recent proliferation of residential and retail development has eliminated wellsituated sites that could have been developed for office use in the future. UNENCUMBERED BY EXISTING DEBT The Property is being offered on a free and clear basis, which allows an investor to take advantage of today s strong lending markets to generate significant levered returns. SUPER ZIP CODE Meridian Center is located in the zip code, which is one of the strongest and most sought after retail submarkets in the country. Minutes north of Meridian Center are Miami Beach s luxury waterfront residences, which range from $2 million to $20+ million. Additionally, Miami is the third strongest hotel market in the United States, trailing only New York and Oahu. RECORD PRICING FOR RETAIL TRADES South Beach has experienced a tremendous increase in retail rents since 2010, as the demand for space within this intense urban shopping district exponentially outpaces the limited supply of available inventory. As a result, prime retail space on nearby Lincoln Road is currently trading for over $5,000 per square foot. Consequently, the new owner will be able to realize significant returns by fully utilizing and adding to the retail potential of the Property. 3

4 Value Enhancement Potential LACK OF LARGE FORMAT RETAIL SPACE As rents on Lincoln Road continue to escalate and approach $400+ per square foot, larger format retailers are seeking alternatives to maintain a presence near Lincoln Road. That has been the trend along Meridian Avenue where two new multi-story structures will be developed to accommodate larger format tenants and join the likes of CB2, Macy s and Yard House. Similarly, Meridian Center could be redeveloped to fill the shortage of high end large format retail space in South Beach, which is in high demand by retailers to build flagship destination stores. 723 Lincoln Lane 1650 Meridian Avenue RETAIL REDEVELOPMENT POTENTIAL Given the recent surge in retail rental rates in South Beach, there is opportunity to convert portions of Meridian Center into a true, multistory retail destination. HIGH VISIBILITY RETAIL LOCATION Located in South Beach, the Property has an easily accessible location on Meridian Avenue between 17th Street and Lincoln Road. Retail tenants at Meridian Center are offered unparalleled visibility with approximately 75 feet of frontage and signage potential along Meridian Avenue. OPPORTUNITY TO INCREASE RENTS TO MARKET RATES As leases expire, there is significant upside for a new owner to increase rents, as the retail space in the building is currently leased at well below market rental rates. Rents for existing retail tenants are 33%-56% below market rents. These rental rates are expected to increase in the coming years as Meridian Avenue is increasingly seen by prospective tenants as a cost effective alternative to the $400+ per square foot retail rents on Lincoln Road. Additionally, the average expiring rents of select office tenants are also below market rates. 4

5 POTENTIAL FOR OFFICE CONDO EXIT The office condo market in Miami-Dade County has become reinvigorated due to the large influx of Latin American investors looking for a secure place to invest their money. As a result, there is opportunity for a new owner to convert individual suites or floors of Meridian Center into office condos, which are currently pricing at over $500 per square foot in South Beach. Although the Building was recently renovated, further upgrades to the office component will yield increased pricing and top of the market rental rates. Sale Process Offering Format and Timeline The Property is offered on an as-is, where-is basis only to select investors registered through an executed confidentiality agreement. Preference will be given to those investment offers that reflect the most comprehensive underwriting and the fewest or no due diligence requirements or other conditions to close. Investors should be prepared to disclose their sources of funds and any approval processes necessary to close the transaction. Due Diligence Upon execution of the confidentiality agreement, investors will be given access to an online document center with detailed property information. The purpose of this is to facilitate due diligence and depth of underwriting. As-Is, Where-Is The Property will be sold on an as-is, where-is basis without any representations or warranties. 5

6 Jefferson Avenue Brickell Downtown Miami McArthur Causeway Star Island Biscayne Bay Port of Miami Road RoadAlton Alton Road Venetian Causeway Dade Boulevard Alton Road 17th Street Lincoln Road Meridian Avenue CONTACT INFORMATION All inquiries and requests for information should be directed to HFF s marketing team for this assignment: MIAMI OFFICE 1450 Brickell Avenue Suite 2950 Miami, FL T F IKE OJALA Director Ext. 133 [email protected] JORGE PORTELA Associate Director Ext. 165 [email protected] INVESTMENT SALES LUIS CASTILLO Managing Director Ext. 145 [email protected] TRACEY GOO Senior Analyst Ext. 148 [email protected] HERMEN RODRIGUEZ Senior Managing Director Ext. 136 [email protected] FINANCING PAUL STASAITIS Senior Managing Director Ext. 103 [email protected] Holliday Fenoglio Fowler, L.P. ( HFF ) a Florida licensed real estate broker HFF and HFFS (HFF Securities L.P.) are owned by HFF, Inc. (NYSE: HF). HFF operates out of 23 offices nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. commercial real estate industry. HFF together with its affiliate HFFS offer clients a fully integrated national capital markets platform including debt placement, investment sales, equity placement, advisory services, loan sales and commercial loan servicing. For more information please visit hfflp.com or follow HFF on HFF has been engaged by the owner of the property to market it for sale. Information concerning the property described herein has been obtained from sources other than HFF and we make no representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all references to age, square footage, income, expenses and any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein are projections only and used for illustrative purposes and may be based on assumptions or due diligence criteria different from that used by a buyer. Buyers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change.