When Aztec Group directors sought a construction loan for a Fort Lauderdale condominium, they went looking for a lender that would provide financing for the developer’s grand plan to link the old and the new. Most immediately, Newgard Development Group needed a loan to build the Gale Residences, a 12-story luxury condo a block from the beach and overlooking the Intracoastal Waterway at 401 Bayshore Drive.
Newgard also plans to renovate the former Escape Hotel next door and rebrand it as a Gale hotel. When it opened in 1949, the mid-century modern hotel was the first one on the beach with a pool and the first built by the late hotelier George Gill.
“Our job was to search for a lender that would not only do the construction loan component but also the hotel,” said Howard Taft, Aztec’s senior managing director. “We needed to find a lender that would understand both concepts.” That required extra effort. “A lot of Florida banks would not do both,” he said. “All the funds said no to a hotel.”
The construction loan amount also provided a challenge. It was too big for some lenders and too small for others. After a two-month search, Aztec secured a $35.6 million loan from a Dallas-based private lender that the Miami real estate investment and merchant bank has worked with in the past. The nonrecourse loan from Hall Structured Finance has a 36-month term and floating interest rate. The loan closed Aug. 2, shortly before the formal groundbreaking for the Gale Residences on Aug. 17. No deal has been struck yet on the hotel renovation financing, but Hall remains an option.
Newgard anticipates starting work on the 96-room hotel in six to eight months. Miami-based Newgard formed a joint venture with Merrimac Ventures, led by Fort Lauderdale real estate investor Dev Motwani, to launch the project. Menin Hospitality of Miami, which was among those that redeveloped a 1940s hotel with 87 rooms into the Gale South Beach, manages the Miami Beach hotel and will have the same role in Fort Lauderdale. Plans for the Gales Residences have changed substantially. Originally, it was to have 74 units with an average price above $1 million.
But as other condos with large units and high prices started being developed, Newgard and Merrimac decided to downsize the size and price of Gale’s units, said Barbara Salk, Newgard’s president and chief operating officer. The condo now will have 129 units at an average 1,250 square feet and $600,000 price. The West Palm Beach architectural firm Garcia Stromberg designed the building, and Miami Beach’s Urban Robot Associates is the interior designer.
“We wanted to make sure we were at a price point that would work for a larger buyer base but still have all the services and amenities,” Salk said. “We wanted something that provided a lot of value and flexibility but also offer something different than what is currently in the market,” she said. “The idea is to have a condominium that will have hotel services without being a condo-hotel.” The condo will have flexible rental standards, with absentee owners free to rent their units, Salk said. “It is a great value in the Fort Lauderdale beach market,” Salk said.
The average price, Taft said, is about half as much as other condo units in the area. With construction just beginning, 70 percent of the units are pre-sold. Taft and Salk said buyers are mix of domestic and international. The Gale project is Newgard’s first in Fort Lauderdale. Its Miami projects include BrickellHouse, a 385-unit condo at 1300 Brickell Bay Drive, and Centro Tower, a 352-unit loft-style condo tower at 151 SE First St.