Delinquency Pushes CGI Merchant's Miracle Mile Building Into Special Servicing
Raoul Thomas’ CGI Merchant can add the office and retail building at 55 Miracle Mile in Coral Gables to its growing roster of properties facing debt troubles.
A $25M CMBS loan tied to the 65K SF property was transferred to special servicer LNR Partners last month after becoming delinquent on mortgage payments, according to the Morningstar Credit database.
CGI Merchant Group didn't make the scheduled payments on the loan in October and November, according to Morningstar. The loan, which has an unpaid balance of $24.2M, is scheduled to mature in June.
The Miami-based company purchased the property at 55 Miracle Mile on Coral Way in 2013 for $26.8M, The Real Deal reported at the time, and secured a $23.4M CMBS loan from Miami-based Rialto Capital in 2014. In May of 2018, CGI Merchant refinanced it with a $25M loan originated by Starwood Mortgage Capital.
Before the loan was moved to special servicing, principal and interest payments began coming in late in July. It was then put on a watchlist with the loan's master servicer, Wells Fargo, according to the Morningstar database.
A CGI Merchant spokesperson said the building's rents are put in a lender-controlled lockbox account.
“The lender has control of the incoming funds,” the spokesperson said. “Whatever obligations we have, as far as we know, we are fulfilling.”
The four-story building was built in 2004 and has 21K SF of office space, according to its website. Retail tenants include the United States Postal Service and Ben & Jerry’s. Its occupancy was 89% as of June, according to Morningstar, a significant improvement from the end of 2021 when occupancy was roughly 71%.
It has dealt with recent vacancies. The Gramercy restaurant on the ground floor closed last year and developer Terranova Corp. recently moved its headquarters from the building — where its 5K SF lease expired in August, per Morningstar — to Lincoln Road on Miami Beach.
There is no clear explanation for why missed and late payments started to occur in July and there appears to be no significant vacancies at the property that would explain the payment issues, David Putro, senior vice president of Morningstar Credit Analytics, told Bisnow.
“This one is a bit of a head-scratcher based on the information available,” Putro said in an email.
Thomas has made headlines this year following a handful of missed payments and foreclosures.
In August, CGI Merchant lost the Waldorf Astoria Washington DC, formerly the Trump International Hotel, in a foreclosure auction after defaulting on a $285M loan. The company also lost the Gabriel Downtown Miami on the same day in a separate foreclosure tied to a $60M loan, The Real Deal reported.
Earlier this month, Thomas was hit with a new foreclosure threat, with a lending company seeking to take over the 15-story 550 Biltmore Way building in Coral Gables. That property, where CGI Merchant defaulted on a $48.7M loan, has an auction scheduled for Dec. 19, according to TRD.
“With 550 Biltmore, we are working diligently in continuous conversation with the lender to cultivate an amicable solution,” CGI Merchant's spokesperson said. “We are very confident we can come to a very amicable solution, and we are very proud that 550 Biltmore is at 90% occupancy.”
There is no indication on whether 55 Miracle Mile will meet the same fate, as there are a number of things that can happen with a property once it is moved into special servicing. The special servicer might negotiate a workout or extension with the borrower, take possession of the property, sell the loan or purchase it out of the CMBS structure at a discount, according to Bloomberg Law.
