One of the largest Opportunity Zone acquisitions in Miami closed on Friday for $9.7 million.
Former LeFrak executive Michael Tillman’s PTM Partners and Estate Investments Group (EIG) acquired the vacant lot at 218 Northwest Eighth Street in a qualified Opportunity Zone near the MiamiCentral train station. The partnership plans to build a 360-unit, 18-story apartment building on the site, Tillman said. The project will be a mix of affordable housing and luxury apartments. Forty units, or 11 percent, will be set aside for affordable housing.
The acquisition was purchased through an Opportunity Zone Fund, which means that developers and investors in the project will be able to get a substantial tax benefit if they hold the property for at least ten years.
In Miami, developers have been eyeing Opportunity Zone properties, but there have been only a few major acquisitions. Most developers are still waiting for the IRS and Treasury Department to release more clarification and guidelines.
Sawyers Walk Ltd. and Poinciana Village of Miami sold the Overtown property to the partnership.
The deal was the first for the newly formed PTM Partners, led by Tillman, a former managing director at LeFrak. The firm is looking to invest in Opportunity Zones on the East Coast. Tillman said the company is looking at ground-up development sites as well as adaptive reuse projects. Its Opportunity Zone Fund is looking to raise $125 million from investors and has raised about $45 million, so far.
The development group plans to break ground in the first quarter of 2019. It expects to complete the project by June 2021.
Rents will be about $1,950 for a one-bedroom, which is less than comparable rents of other Class A apartments in Brickell or downtown Miami, Tillman said. Units will be geared toward millennials and be smaller than the typical new Miami apartment.
“It’s a very fitting value proposition for renters. For millennials, the size of the unit is less important than the amenities,” he added.
EIG, led by Robert Suris, has completed and sold more than $200 million in residential real estate assets in the past two years, according to a press release. It’s also developing the 200-unit Soleste Bay Village in an Opportunity Zone site in Palmetto Bay. Suris previously said he’s considering selling the property to an investor who is willing to pay more because of its Opportunity Zone designation.