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July 29, 2010 |
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| September 03, 2008 |
By: Review staff |
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L-R: Fernando Alonso and J. Andres Cedron
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Dealmakers: Attorneys Fernando Alonso and J. Andres Cedron.
The Deal: The Hunton & Williams attorneys represented Instituto Costarricense de Electricidad, a large Costa Rican public utility, which obtained a $381 million credit facility from the Inter-American Development Bank. The unsecured 15-year loan will consolidate and refinance the company’s external debt.
Details: The Inter-American Development Bank is a quasi-governmental organization. Instituto Costarricense de Electricidad controls and owns all of Costa Rica’s electric and telecommunications facilities. ICE is a national autonomous public institution, which holds financial and administrative independence from the Costa Rican government.
The loan will help ICE’s telecommunications division face upcoming competition in the country’s telecommunications sector due to Costa Rica signing the Dominican Republic-Central America Free Trade Agreement, or DR-CAFTA.
“They are the phone company and the electric companies,” Alonso said. “As you can see from the size of the loan, it’s a very significant company. This is a very important transaction for ICE, because it will face competition from private entities.”
Alonso said the loan will help ICE modernize its systems by “investing in the company in such a way that it can compete.”
He said adapting to the IDB’s specific formulas for the loan documentation was the biggest challenge in assembling the deal.
“There’s no question that the type of documentation called for a lot of negotiation,” Alonso said. “Because ICE is such a large company, it’s a complicated structure. We spent many hours really making sure that we permitted the covenants in this loan to be flexible enough so as to permit the company to continue to operate not only as it does today, but as it will in the future as the result of this new competition law.”
That meant taking into account the existing dynamics of what ICE was doing and how it operates as a public entity as well as the likely changes it would encounter under the new laws.
“Understanding what could occur in Costa Rica and taking that into account was really something novel,” Alonso said. “Many times, when you make a loan, lawyers are focused on just the operational aspects of the company as it operates today, not what it will look like in the future.”
Quote: “This is a significant transaction, one of the largest undertaken in Costa Rica, and comes during the early stages of the opening to competition in the telecommunications market,” Alonso said. “This financing will allow ICE to continue to be the leader in the telecommunications and energy sectors in Costa Rica, as well as meet demands that competition and other developments in these sectors will create.”
Background: Alonso, a partner in the Miami office of Hunton & Williams, heads the Latin America practice group. Cedron is a Hunton & Williams associate. ICE’s in-house counsel, Yaila Sanchez, assisted the Hunton & Williams attorneys in the transaction.
IADB was represented by in-house counsel Augusto Repetto and partners Ronald Lachner and David Gutierrez and associates Manuel Ventura and Natalia van der Laat from BLP Abogados and by Clifford Chance in the United States.
— Wayne Tompkins
Banco Itau Europa assumes lease worth $25 million over 14 years
Dealmaker: Don Cartwright
The deal: Cartwright represented Wachovia Financial Center in the leasing of 38,143 square feet of office space to Banco Itau Europa International. The lease, which began in July, will run until mid-2022. The value of the lease over the full term is $25 million.
Details: Banco Itau assumed a lease that ABN Amro Bank had in place until 2012. Itau acquired ABN Amro last year. Under the new lease, Itau will lease the same space plus an additional 3,580 square feet, Cartwright said. The tenant plans to reconfigure the space and hired San Francisco-based Gensler Architecture and Design to do the work. The bank, which occupies the 22nd floor and a portion of the 21st floor, will occupy the space during its renovation.
Cartwright said the tenant preferred to rent the space now and begin renovations as soon as possible rather than having to wait three years to rent space in one of the new office towers now under construction in downtown Miami and in the Brickell Avenue area.
The Wachovia Financial Center, which is 98 percent leased, charges some of the area’s highest rent rates, ranging from $43 per square foot to $55 per square foot. Despite the nearly 2 million square feet of office space in the pipeline, Cartwright said the transaction was based on the market’s current condition.
“The lease was reflective of the occupancy rate in today’s market,” he said. The vacancy rate in downtown Miami is 8.1 percent and 10.5 percent in the Brickell area, according to a report by CB Richard Ellis.
Cartwright declined to comment on whether landlord’s concessions helped seal the deal. He was the only broker involved.
Wachovia Financial Center’s 2 percent vacancy is poised to grow by the end of 2010 when law firm tenant Bilzin Sumberg Baena Price & Axelrod vacates four contiguous floors to move to the Brickell Financial Centre, which is scheduled to be completed in 2010.
Cartwright sees the law firm’s exit as an opportunity to attract new tenants at a higher rental rate, he said.
While operating expenses have increased significantly in the last two decades, actual net rent rates haven’t, he said. The net rent in the mid-1980s was in the low $20s per square foot. Today, the net rent ranges from the mid $20s to the low $30s per square foot. So, for example, in a $50-per-square-foot lease, the landlord gets $33 per square foot in net rent and the rest goes to pay operating expenses.
“One of the challenges in today’s market is educating tenants and brokers on the appropriate rent charged in relation to the value of the building,” he said.
Background: Cartwright is Cushman & Wakefield’s director of leasing and client solutions. He spearheads leasing and marketing initiatives for Wachovia Financial Center. He has three decades of experience in leasing, selling, managing and developing Class A properties.
Cushman & Wakefield team aids in $26.5 million sale of shopping center
Dealmakers: Adam Feinstein, Mark Gilbert and Eric Williams
The deal: The Cushman & Wakefield investment sales team represented Plantation-based Hollywood Palms LLC in the $26.5 million sale of the Hollywood Palms shopping center to New York commercial real estate investor Milbrook Properties.
Details: Hollywood Palms is Milbrook’s seventh acquisition in Broward County.
Milbrook paid about $125 per square foot for the 210,864-square-foot shopping center on 22.18 acres at 6831 Taft St. in Hollywood last month. The 47-year-old building includes tenants Publix, Walgreens, Bealls Outlet and Rent-A-Center.
The purchase was part of a 1031 tax deferral exchange for Milbrook, which did not hire a broker. Milbrook used revenue from the sale of a New York apartment building to fund the Hollywood Palms acquisition.
The shopping center’s design and proximity to a dense population base makes it desirable to both local and national retailers, Feinstein said.
“People like the layout of the site, a rectangular building with extensive frontage on Taft Street,” he said. “Sites like these are very hard to find today, with a long linear development versus an L-shaped or U-shaped building.”
Despite Milbrook’s bullishness about investing in the region, completing the deal proved to be difficult, Feinstein said. Negotiations lasted about five months and the seller entertained several other offers.
“We received good interest for the property,” he said. “Clearly getting transactions completed in today’s market is challenging. The seller and buyer in this transaction worked together closely to overcome a number of issues to make the deal possible.”
Hollywood Palms was extensively renovated before the sellers bought the building for $16.2 million in December 2004. About 20,000 square feet was added to the building last year.
Background: Feinstein is executive director of the Cushman & Wakefield investment sales group. Gilbert is executive vice president. Williams is a broker for the investment sales group.
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