Miami Worldcenter project gets a boost with $247M high-yield bond sale

The Public Finance Authority’s $246.7 million tax-exempt revenue bond deal for Miami Worldcenter will help finance one of the largest urban development projects underway in the United States and provide high-yield investors with attractive yields.

The deal, priced by senior manager D.A. Davidson & Co. and co-managing underwriter Truist Securities Tuesday, came with two term bonds.

The $195.835 million of Series 2024A tax increment revenue senior bonds, due June 1, 2041, was priced at 97.199 with a 5% coupon to yield 5.25%.

The $50.865 million of Series 2024B tax increment revenue subordinate bonds, due June 15, 2042, was priced at 97.633 with an 8.00% coupon to yield 8.25%.   

The bonds are special limited obligations of the PFA and are secured by pledged revenue, consisting of economic incentive payment revenue.

The unrated deal is attracting institutional municipal bond buyers looking to stock up on high-yielding paper, joining other recent high-yield issuers that have seen strong demand. The bonds are being offered “only to knowledgeable and experienced investors who are not purchasing with a view to distributing the bonds,” according to the POS. The bonds are being issued in minimum initial denominations of $100,000.

High-yield municipals are outperforming investment-grade munis so far this year. Bloomberg data shows the high-yield index returning 1.01% month-to-date and 1.33% year-to-date while the broad muni index is in the red at -0.01% in March and -0.39% in 2024.

Despite some concerns about liquidity in the high-yield space following Citi’s exit, municipal bond high-yield mutual funds saw another round of inflows in the latest week, with $180.4 million coming into the funds in the week ended March 20, compared to the previous week’s inflows of $278.6 million, according to LSEG Lipper. It marked the 11th consecutive week of positive flows into the high-yield space.

Proceeds from the deal will be made available in the form of a grant under an agreement between the Wisconsin-based PFA, Miami Worldcenter Holdings (the grantee) and U.S. Bank Trust Co. (the trustee) to finance or refinance some of the costs of private improvements in the development and repay an outstanding BankUnited loan, according to the preliminary official statement.

Some of the proceeds of the Series 2024A senior bonds will be used to pay interest on Series 2021A senior bonds and fund the senior reserve fund.

Bond counsel is Greenberg Traurig while Gilmore & Bell is special tax counsel. Attolles Law is counsel to the authority, Paul, Weiss, Rifkind, Wharton & Garrison is counsel to the grantee, Kutak Rock is counsel to the managing underwriter, Holland & Knight is counsel to the trustee, Sanchez-Medina, Gonzalez, Quesada, Lage, Gomez. & Machado is local TIF counsel to the grantee.

With about 27 acres for retail, residential, commercial and hotel use, Miami Worldcenter is the largest urban development project underway in the city and is one of the largest being undertaken in the United States. It is similar in scope to the Hudson Yards project in New York City.

“Miami Worldcenter is home to nearly $6 billion of new development and investment, including retail and entertainment, restaurants, hotel rooms, public spaces and multiple residential towers spanning 27 acres in the heart of Miami,” according to the Worldcenter development team.

“The rise of Miami Worldcenter in a previously underdeveloped and underserved district was made possible because of early support from the Southeast Overtown/Park West Community Reinvestment Agency (CRA), which shared our vision for a mixed-use, transit-oriented destination,” the development team said in a statement to The Bond Buyer.

“The CRA approved tax increment financing for the project in 2017, helping to offset the cost of infrastructure upgrades and community improvements, including modernized mass transit stations, new landscaping, public art, green space, expanded sidewalks, garage parking, increased water and sewer capacity, and new electrical connectivity and lighting,” the development team said.

“Now that the first phase of Miami Worldcenter is complete and the second phase is underway, our team is issuing bonds backed by the TIF package, which will help defray the cost of the improvements made in the district,” the development team said. “Initial feedback surrounding the bond issuance has been positive, and we look forward to fully realizing the vision for Miami Worldcenter as the final phases of development come online in the next few years.”

Nitin Motwani is managing partner of Miami Worldcenter Associates and has overseen the development of the $6 billion mixed-use real estate project.

He is responsible for land acquisition, zoning and entitlements, public and private financing, joint ventures and development.

Motwani is also managing partner for Merrimac Ventures, a real estate investment and development firm based in Fort Lauderdale.

The firm’s portfolio primarily focuses on prime resort and mixed-use development, but also includes extensive investments in multifamily residential, condominium, retail and office developments. In this role, he is involved with acquisitions, development, and capital markets for mixed-use projects as well as hotel, office, retail and residential assets.

Before joining Miami Worldcenter, Motwani was an equity derivatives trader at Goldman Sachs in New York. He was also involved in the creation of Encore Housing Opportunity Fund, a private equity fund focused on real estate investments and development. He has worked on more than $1 billion of investments in Florida, California, Texas and Arizona.

He is on the board of the University of Miami’s Master of Real Estate Development program and previously served as board chair. He is also a member of the Young Presidents’ Organization’s Miami Chapter and Global Chapter, the Urban Land Institute, the International Council of Shopping Center and of City Year’s Red Jacket Society.

He is also involved in the R. Motwani Family Academy of Hospitality and Tourism Management at Broward College. Previously, he served on the board of the Miami Downtown Development Authority for 15 years, where he was the co-chair of the enterprise committee; and as co-chair for One Community One Goal, Miami-Dade County’s long-term strategic plan for economic development.

Art Falcone, is the founding principal of Miami Worldcenter. He is also the co-founder and managing principal of Encore Capital Management, a real estate investment and development firm. Previously, he was CEO and chairman of the Falcone Group, a real estate and land development company.

Falcone serves on the board of trustees for Nova Southeastern University. He was inducted into the school’s Entrepreneur Hall of Fame in 2006.

Southeast Florida has been on a roll, with its economy booming and population expanding over the past five years — and Miami has been at the epicenter of this growth. Many financial services firms have opened offices in the Miami area, such as BNP Paribas.

On March 8, The Commercial Observer reported Apple was officially coming to the Miami Worldcenter, according to a leasehold agreement filed to Miami-Dade County. 

Apple’s tenancy was also confirmed by two people involved with the wider Miami Worldcenter project, at a Commercial Observer event in Miami. The store is expected to open as early as next year.

Construction of the one-story, stand-alone retail building at 725 NE First Avenue has been underway since November. The $12 million development, which sits on an 18,600-square-foot site, is at the corner of Northeast Eighth Street, just west of the Jewel Box retail building.

On Friday, FloridaCommerce reported that for the third month in a row the Miami metropolitan statistical area in February gained the highest number of private-sector jobs on a year-over-year basis compared to all other metro areas in the state.

The Miami MSA’s private-sector employment rose by 2.9% from last February while its unemployment rate dropped 0.2-percentage points to 1.6% from 1.8% in February 2023.

The Miami MSA led all metro areas in the state in job gains over the year in the sectors of leisure and hospitality, construction, financial activities and professional and business services.