L&L Holding Company, which recently secured a $215 million loan from Bank OZK for a Miami mixed-use development, will be looking further afield from its New York headquarters for some of its next transactions.
The firm, which made its name as a developer of large, urban office and mixed-use deals in the New York area, is channeling that experience in markets in Florida and beyond and sectors like multifamily that have more momentum and opportunity.
“New York has been adversely impacted by covid-19 and hybrid work,” Robert Lapidus, president and chief investment officer at L&L, told Real Estate Capital USA. “The near-term opportunities will include rescue capital deals where sponsors require additional capital to implement capital improvements and leasing programs, as well as conversions of antiquated office buildings to other uses, primarily residential. The macro-economic and political environment needs to improve as well.”
While the city remains L&L’s home base and central portfolio fixture, Lapidus noted capital providers are likely to hang up on a call pertaining to any seemingly great office building purchase in New York in the current market.
In response, L&L is going elsewhere to source deals where momentum is still palpable in places such as Miami and beyond. “There is a lack of liquidity in the capital markets right now, particularly for office buildings and new commercial development,” Lapidus said. “Some of the major construction lenders, like Blackstone, are on the sidelines right now.”
Lapidus noted the current difficulty in attracting equity and debt to markets where there is perceivably more growth to be had is stunting competition and keeping doors open for market participants still active amid the noise.
“When you build the best product, you tend to lease it,” Lapidus said. “So, in strong markets, you get the highest rents and in the markets that are a little weaker, you still attract the tenants because people who are running their businesses want their employees back in the office, they want to bring them to amenitized spaces that encourage them to come to work.”
The case for a return to office and full tenancy in New York City’s swath of mid-block, Class B buildings with poor lighting and no amenities is less compelling, Lapidus said.
For L&L, new opportunities will be sourced in growing markets such as Florida where the demand for office and multifamily assets in Miami and beyond has only grown in recent quarters.
Alongside Oak Row Equities, the firm solidified a $215 million financing package on January 20 for the construction of a one-million-square-foot multi-use campus dubbed The Wynwood Plaza.
Bank OZK provided the loan to L&L and Oak Row who are working alongside project partner Shorenstein Properties and co-investor Claure Group as part of the development. OZK’s backing of the deal continued its streak as one of the only lenders still cutting sizable loans for construction – or any purpose – on a near-weekly basis.
Newmark’s Dustin Stolly and Jordan Roeschlaub represented L&L and Oak Row in capitalizing the project and Berkadia’s Scott Wadler and Michael Basinski arranged the Bank OZK financing.
Lapidus said the sponsorship cohort executed a low leverage loan at approximately 50 percent loan-to-cost to get better economics on the deal. The funding was done on a pari passu basis, which he said benefits the overall project internal rate of return.
Lapidus said construction and leasing efforts across the asset have already commenced with the anticipated completion set for 2025.
The Wynwood Plaza will be comprised of Class AAA office, residential, retail and outdoor space at 95 Northwest 29th Street in Miami’s Wynwood Arts District. Gensler designed the asset and is serving as architect of record and James Corner Field Operations – who also designed New York City’s High Line – will design the outdoor spaces.
L&L and Oak Row have pre-leased two floors at the asset’s 12-story office tower and Claure will plant its headquarters across the entirety of the eighth floor. Weitz & Luxenberg will also occupy the office tower’s second floor as part of the establishment of its first Miami office.
The multifamily component of The Wynwood Plaza will include 509 luxury rental apartments and the retail component includes 32,000 square feet of space atop 6,600 square feet of outdoor dining space.