NEW BUSINESS  9.

COMMITTEE MEMORANDUM

HISTORY:

The Miami Beach Redevelopment Agency (Landlord) and Mr. R Sports, Inc. were parties to a lease agreement for 100 16^th Street, Suite 5, dated April 2, 2015.  The lease term was for a period of approximately three and a half (3 ½) years and expired on October 1, 2018.  Since that time, the retail property has remained vacant.

Pursuant to a Professional Service Agreement with the City, CBRE, Inc. provides real estate brokerage services for the Anchor Shops retail component and serves as the listing agent for the premises.  CBRE contacted City staff to express interest in leasing the space on behalf of Cruise & Tours Center, LLC d/b/a Admiral Cruise & Transportation (Tenant).

Admiral Cruises is a Miami Beach-based travel company specializing in cruises, tours, transportation, and related services from Miami to the Bahamas.  The company’s office is currently located at 227 1^st Street and the owners desire to relocate to the Anchor Shops.

The Tenant’s financial statements, including profit & loss statements, balance sheets, and bank account statements, are attached as Exhibit A (Financial Statements).

Subsequent to negotiations, Tenant executed a letter of intent, attached as Exhibit B (Letter of Intent), containing the basic terms and conditions enumerated below.

Landlord:  Miami Beach Redevelopment Agency ("RDA")

Tenant:  Cruise & Tours Center, LLC d/b/a Admiral Cruise & Transportation

Personal Guaranties:  The company’s two owners, Oleksandr Grygoriv and Ieva Baliukeviciene, jointly and severally, shall personally guarantee to the Landlord the full and faithful performance of all the obligations, duties, and liabilities of Tenant under the lease

Premises:  100 16^th Street, Suite 5, Miami Beach, Florida 33139

Size:  Approximately 721 rentable square feet

Term:  Five (5) years

Renewal Options:  None 

Rent Commencement:  The Rent Commencement Date shall be sixty (60) days following lease execution or upon completion of construction, whichever occurs sooner

Base Rental Rate:  $75.00 per rentable square foot, plus applicable sales tax

Annual Rent Increases:  The base rental rate shall be increased by three percent (3%) annually

Lease Basis:  Triple Net – In addition to the base rental rate, Tenant shall pay its proportionate share of the costs of real estate taxes, insurance, and maintenance expenses (currently estimated at $10.00 PSF)

Payment at Lease Execution:     Three (3) month’s rent (comprised of first month’s rent, last month’s rent, and one (1) month security deposit)

Utilities:  Tenant shall be responsible for the cost of its utilities and trash removal

Construction Allowance:  Tenant shall accept the Premises in “as-is” condition

Signage:  Tenant shall have the ability to install exterior signage above its space, subject to the approval of Landlord in its proprietary and regulatory capacities

Use:  Travel agency, and the provision of related services, subject to certain limitations and prohibitions

Agency Disclosure:  CBRE, Inc. represents the Landlord in this transaction and shall be paid a commission from the Landlord in the event a lease is mutually executed and delivered, in accordance with a listing agreement.

Conditions:  The Letter of Intent is non-binding upon either party, and may be modified or withdrawn by the Landlord, without notice, at any time.  Only a fully executed and delivered lease agreement, which shall be negotiated in good faith by both parties, shall serve as a binding agreement in this regard.

ANALYSIS:

Under the previous lease for this space, the tenant was paying a base rental rate of $68.96 per square foot during the final lease year, plus operating expenses (on an NNN basis).  The lease was subject to three percent (3%) annual increases during its 42-month term.  The proposed lease for your consideration provides for a base rental rate of $75.00 per square foot, with three percent (3%) annual increases.  The proposed lease is on an NNN basis with estimated operating expenses of $10.00 per square foot.  The proposed rent structure is contained in the following chart:

A current rent detail for the existing five (5) retail/restaurant tenants at the Anchor Shops is contained in the chart below.

Leasing Brokerage Commission

CBRE shall be paid a leasing commission pursuant to the Professional Services Agreement dated October 24, 2017 between the City and CBRE, Inc. for real estate brokerage services, as authorized by City Commission Resolution No. 20417-29988. Per the Professional Services Agreement, the City will be obligated to pay a commission fee equal to four percent (4%) of the gross aggregate base rent over the five (5) years of the lease, as contained in the following chart.

CONCLUSION:
The Administration recommends in favor of approving a new lease agreement with Cruise & Tours Center, LLC d/b/a Admiral Cruise & Transportation due to: 1) competitive rental rate and favorable lease terms, 2) Tenant’s acceptance of the Premises in “as-is” condition and 3) reduced brokerage commission based only on one broker. The Administration seeks direction from the Finance and Citywide Projects Committee.