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Two Massive Office Buildings at Risk of $42 Million Foreclosure in Florida
7 hours ago
Photo byLoopnet
Two office buildings in downtown Miami are at the center of a $42.3 million foreclosure lawsuit filed on September 6. The lawsuit, initiated by Atlanta-based AFF IV 200 Miami LLC, targets two properties owned by SRCTD 44-200 LLC, based in Deerfield Beach, and Cleveland Heights, Ohio-based FS Equity Investments II LLC.
The lawsuit focuses on a 12-story, 150,530-square-foot building located at 200 S.E. First Street and a 25-story, 172,292-square-foot building at 44 W. Flagler Street, also known as Courthouse Tower. According to property data firm Vizzda, the parties involved and the details of the case have been confirmed.
In May 2022, the borrowers secured a $58.36 million mortgage to purchase both buildings for a combined $56.7 million. The loan had an interest rate of SOFR plus 7.55%, with a maturity date of June 1, 2024. When the loan was originally issued, SOFR (Secured Overnight Financing Rate) was 1.2%. However, with today’s SOFR rate at 5.3%, the mortgage payments have increased substantially.
According to the lawsuit, the borrowers defaulted on their payments starting January 1 and failed to pay off the loan by the June 1 maturity date. Additionally, they did not pay property taxes for two years, amounting to nearly $1.2 million. The total amount allegedly owed is $58.4 million, which includes $42.3 million in principal, plus interest and fees.
The lender is not only seeking to foreclose on the buildings but is also requesting the appointment of a receiver to manage the properties during the legal process. The buildings are currently managed by Stonerock Capital Management, which was mentioned in the lender's payment demand letter, although Stonerock is not a defendant in the lawsuit.
The building at 200 S.E. First Street was built in 1958 on a 13,905-square-foot site, while Courthouse Tower was constructed in 1974 on a 7,440-square-foot lot. Notably, the Consulate General of Jamaica is one of the tenants in Courthouse Tower.
When the properties were purchased in 2022, they were only 59% leased. According to recent online listings, 47,723 square feet (32%) of the space at 200 S.E. First Street is available for lease, with asking rents ranging from $39 to $60 per square foot. Courthouse Tower has 84,521 square feet (49%) available for lease, with asking prices between $39 and $44 per square foot.
While Miami’s office market has seen growth, particularly in Class A spaces in areas like the Brickell Financial District, it has been more challenging for Class B office buildings, like the ones in this case, to attract and retain tenants amid increasing competition.
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