Affinius Capital Faces Foreclosure On $69M Miami Office Loan
A 262K SF Coral Gables office tower could be headed to foreclosure as it struggles with occupancy despite the neighborhood’s rising profile as a destination for Miami's office users.
The foreclosure suit was filed against San Antonio-based Affinius Capital regarding a $69M mortgage backed by Columbus Center, a 14-story office building located at 1 Alhambra Plaza. It was developed by USAA Real Estate, which changed its name to Affinius last year after the acquisition of Square Mile Capital.
Trimont filed the suit on behalf of the project's lender, Minneapolis-based investment manager Värde Partners, after the firm was appointed as a special servicer for the debt in July.
The suit, filed in the Eleventh Judicial Circuit of Florida, alleges that Affinius failed to enter into an obligatory additional rate cap agreement dictating payment terms. The mortgage is part of a CMBS trust named VM Finance 202-FL4 LLC.
Värde notified Affinius on March 15 that the maturity date on the mortgage had been accelerated because no agreement had been reached, and requested repayment of the loan’s full balance.
Värde offered a path to hold onto the property on May 24, according to the suit, offering to reinstate the loan if Affinius fulfilled several requirements, including paying a $2.4M lump sum, entering into an interest rate cap agreement and funding a new interest reserve account with roughly $2.5M.
Affinius didn't fulfill the requirements and agreed to the appointment of a receiver to resolve the debt, according to the suit, which was filed by Holland & Knight attorneys Annie Gamez, Maria Gonzalez in Miami and Chris Chauvin in Dallas.
The landlord is being represented by Conor Shary at Hunton Andrews Kurth, according to court records posted to property intelligence platform Vizzda.
An Affinius spokesperson declined to comment.
The suit seeks to compel the appointment of a receiver along with the transfer of the property to Värde or an auction to satisfy the outstanding debt. Värde, through Trimont as special servicer, is looking to recover the $68.9M principal loan amount plus nearly $6M in additional past due and default interest.
The debt is accruing $19K in daily interest under its original default agreement, according to the complaint.
Värde, Shary and the Holland & Knight attorneys representing the lender didn’t respond to Bisnow’s request for comment.
The debt was moved into special servicing on March 13 and the parties were pursuing a deed-in-lieu-of-foreclosure workout at the time, according to commentary in the Morningstar Credit database.
The debt had an original balance of $58M when it was issued in December 2020 to refinance older loans, per Morningstar. The interest-only, floating-rate loan was originally set to mature at the end of December.
Columbus Center stopped generating enough income to cover its debt service as interest rates rose and occupancy declined.
The property was 69% leased with a 1.98 debt-service coverage ratio in mid-2021. Occupancy slipped to 63% as of June, and rising operational costs pushed DSCR to 0.59, according to Morningstar. An online listing shows roughly 99K SF of available and vacant space, ranging from shell to full build-outs.
Morningstar lists Apple as a major tenant at the property, but the tech giant recently leased 42K SF at the nearby Plaza Coral Gables for a new office space.
Columbus Center, which also includes an on-site parking garage, was built in 1991 and renovated in 2022 with a new lobby, terrace and conference center. Bay 13 Brewery and Micoco’s Cafe were also added to the ground floor.
Coral Gables, a suburban enclave of Spanish-inspired architecture just west of Downtown Miami, has been a popular destination for wealthy transplants from other cities as well as companies looking for office space outside of Miami’s urban core, including the likes of FIFA.
But the neighborhood hasn’t been immune to pressures facing the broader office market. Despite 269K SF in leasing activity in Coral Gables through the first three quarters of the year, according to Cushman & Wakefield, the only major office sale in the market this year traded for a loss.
Banyan Street Capital and Oaktree Capital Management sold the 475K SF Douglas Entrance office complex in the northeast corner of the city for $76M in March. Colonnade Properties picked up the property at a 25% discount from its sale price a decade earlier.
