Deep pockets needed for Miami Herald site: $190 million land now at $116 million
By Yudislaidy Fernandez
The prime 10-acre Omni site across from the Miami Herald's headquarters, which had a $190 million sale contract cancelled last month, today is valued at $116 million, as realty experts say it would take a very deep-pocketed investor to buy and redevelop it.
Media giant The McClatchy Co., the Herald's owner, had had the land under contract since 2005. The site has taken a $42.8 million loss in value in the past two years.
In 2009, the company reduced its value by $26.3 million to $151 million. Then last year it wrote down its value by another $21.4 million to $116 million, according to its 2010 Form 10-K filed last week with the US Securities and Exchange Commission.
The 10-acre site, which faces the Adrienne Arsht Center, consists of parking lots in front of the publication's offices. The deal also included a Biscayne Boulevard retail building, the Boulevard Shops.
Although this is considered a trophy parcel, it's going to take a developer with deep pockets to inherit a property with such a protractive timeline, commercial appraiser Patricia Birch said Tuesday.
"With this protractive timeline, the market changes on you," said Ms. Birch, vice president of Gallaher & Birch. "With these huge projects, it takes so long the investors get weary. There is an in and out of financing and, many times, the market changes and the original idea may not be supported by current market conditions."
Values of local commercial properties, based on sales tracked from the market's peak, around 2005 and 2006, to now have fallen an estimated 20% to 40%, she noted.
Before the sale's cancelation, proposed developer Mark Siffin had most recently gotten a speedy approval from the Miami City Commission to build a retail complex and a 1,600-space garage topped by two massive media towers.
McClatchy is to get a $7 million termination fee. It has pocketed $16.5 million in nonrefundable deposits, which it has used to repay debt.
The publicly-traded company has been struggling financially. Its reported net income from continuing operations was $15.8 million for the fourth quarter of 2010 compared to $32.4 million in the fourth quarter of 2009.
A McClatchy spokesman said there were no specific plans to report for this property.
But if the site were re-listed for sale, it would garner interest from investors not only because of qualities such as its water views, access to road systems and area amenities but also because few undeveloped prime sites exist in land-constrained Miami-Dade, Jonathan Kingsley, Grubb & Ellis's senior vice president, said Tuesday.
The drop in value also benefits the media owner in that it minimizes its tax exposure, he said, as "there is no guarantee how long it will take to sell the property."
International investors, particularly from countries like Venezuela and Argentina, would be attracted to this property because they are looking to invest their capital abroad.
"But the value, it's not necessarily a token of what buyers will pay," Mr. Kingsley said. "They will look at the inherent value.… It depends on what anyone wants to do, whether it's build a Wal-Mart, build a condo or anything in between."
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