| | | | | | | | | TO: | Finance and Economic Resiliency Committee Members
|
|
| FROM:
| Alina T. Hudak, City Manager |
|
| | DATE: | October 31, 2022
|
|
| | SUBJECT: | A DISCUSSION OF A PROPOSED LEASE AGREEMENT BETWEEN THE MIAMI BEACH REDEVELOPMENT AGENCY, A PUBLIC BODY CORPORATE AND POLITIC (RDA), (LANDLORD) AND COLLINS 1560, LLC D/B/A LIME TREE CAFÉ (TENANT), FOR APPROXIMATELY 2,697 SQUARE FEET OF GROUND FLOOR RETAIL SPACE AT THE ANCHOR SHOPS AND GARAGE, LOCATED AT 1560 COLLINS AVE, SUITES NOS. 1-2, MIAMI BEACH, FLORIDA (PREMISES), FOR A PERIOD OF NINE (9) YEARS AND TWO HUNDRED AND SEVENTY-TWO (272) DAYS. |
|
| | | | | | | | HISTORY:
| The Miami Beach Redevelopment Agency (the RDA(Landlord) is the owner of approximately 2,697 square feet of ground floor retail space, located at 1560 Collins Avenue, Suites Nos.1-2, Miami Beach, Florida 33139 (Premises). The retail space was most recently leased as a swimsuit shop which lease agreement terminated in April 2018. The Premises has remained vacant since.
The City, on behalf of the RDA, began marketing the space for lease upon its vacancy through the services of City-approved brokerage firm, CBRE. In order to obtain current and accurate market rental data, the City relied upon a procured certified appraisal by Cushman & Wakefield, dated November 2, 2020 attached hereto as Exhibit A (Appraisal). The City also requested a Market Rent Analysis from CBRE for comparable spaces which is attached hereto as Exhibit B (Analysis). As contained in the Analysis, the current market rent for comparable space is $75.00 per square foot, on a triple net (NNN) basis.
After negotiations, the Administration received interest from prospective tenants and has selected Collins 1560, LLC d/b/a Lime Tree Café for a French/Italian fusion dining experience. Attached hereto as Exhibit C is the Letter of Intent (LOI), containing the below basic terms and conditions of the proposal:
|
Premises:
|
± 2,697 square foot Premises located at 1560 Collins Ave, Suites Nos. 1 - 2, Miami Beach, FL
|
|
Lease Term:
Renewal Options:
Commencement Dates & Rent Abatement:
|
The term of this Lease shall be for a period of nine (9) years and two hundred seventy-two (272) days, to remain coterminous with the adjacent restaurant (Open Vision One, LLC).
None.
The Lease Commencement and Tender date will be the date Landlord delivers the Premises to Tenant. The Rent Commencement Date will be the earlier of 1) one hundred eighty (180) days from Tender Date; or 2) the date any portion of the Premises opens for business.
The Rent Abatement period shall be during months 2 – 12 of the Lease l Term. Since Tenant is prepaying the first month’s rent, Rent Abatement starts in month 2. Tenant shall be required to pay all Operating Expenses during the Rent Abatement period.
|
|
|
|
|
Minimum Rent
Schedule:
|
|
Initial Term
|
|
Year(s)
|
Annual Rent/SF
|
Annual
Rent
|
|
1
|
$75.00
|
$202,275.00
|
|
Rent to increase 3% per year during the Lease Term.
|
|
|
Sales Tax:
Prepaid Rent:
Security Deposit:
|
Tenant shall pay the applicable sales tax currently equivalent to 6.5% in Miami Dade County.
Tenant shall be required to pay the first month’s gross rent in the amount of $21,302.93 (inclusive of operating expenses and sales tax) which shall be due upon Tenant’s lease execution.
The amount of $40,005.50 (subject to Landlord’s review of Tenant’s financials and credit report) shall be due upon Tenant’s execution of the Lease documents, in addition to first month’s rent.
|
|
Operating Expenses:
|
Tenant shall pay its pro rata share of Real Property Taxes, Property Insurance and Common Area Maintenance for the Project. Tenant’s pro rata share shall be determined based upon the ratio of Tenant’s floor area to the total floor area of all the retail space in Landlord’s Parcel (to be further clarified in the Lease). Current estimate for NNN Costs are $14.00 per square foot. Operating Expenses will be effective on the Rent Commencement Date.
|
|
Concession Area:
|
Tenant shall be required to execute a Concession Agreement and pay for use of the Concession Area, based upon $30.00 per square foot with 3% annual increases during the term of the agreement. Tenant will not be required to pay Operating Expenses in connection with the use of the Concession Area.
|
|
Utilities:
|
Tenant shall pay for all utilities within the Premises.
|
|
Delivery Conditions:
Tenant Improvement Allowance:
|
Tenant shall accept the Premises in “As-Is” condition with no Landlord Work. Tenant shall be responsible for the costs of any building permits, licenses, impact fees and any other costs associated with Tenant’s use.
N/A
|
|
Tenant’s Work:
|
All work performed by Tenant to build out their Premises is at Tenant’s cost and expense. Tenant’s work is subject to Landlord’s review and approval of Tenant’s plan and specifications, which shall be drawn by a licensed architect if a building permit is required. All of Tenant’s work shall be performed by licensed contractors and in accordance with all applicable codes.
|
|
Maintenance &
Repair:
|
Landlord shall be responsible for all repairs to the foundations and for all structural components of the Project. Tenant’s obligation for repairs, replacements and maintenance shall include, but not be limited to, its equipment; fixtures; improvements; floor covering; the exterior and interior portions of all doors, door locks, security gates, and windows; plumbing and sewage facilities not Landlord's obligation; walls; ceilings; and all plate glass; all electrical systems and equipment; plumbing, mechanical equipment; heating, ventilating and air-conditioning machinery. Additionally, Tenant shall maintain and keep in good repair, all heating and air-conditioning equipment. Tenant further agrees to regularly service said machinery and change the filters in the air-conditioning system in the Premises through a monthly filter and equipment service contract.
|
|
Assignment &
Subletting:
|
Tenant shall not assign the lease or sublet the Premises without the prior written consent of Landlord, which consent may be withheld at the sole and absolute discretion of the Landlord.
|
|
Permitted Use:
|
Tenant shall use the Leased Premises solely for the purpose of an upscale French Italian fusion café consistent with the menu with shall be attached hereto as Exhibit “A” and for no other use or purpose.
|
|
Exclusive Use:
Percentage Rent:
Sales Reporting:
|
N/A
Six percent (6%) over the natural breakpoint of $3,371,250 for the first year.
Within fifteen (15) days after the end of each month, Tenant shall submit to Landlord a written statement showing the gross sales of all merchandise sold and/or services rendered in or from the Leased Premises for such month, and year, as applicable.
|
|
|
|
|
Operations:
|
Tenant agrees that on Rent Commencement Date, it will open and continuously operate the entire Premises to the public, fully fixtured, staffed and stocked.
|
|
Tenant’s Signage:
|
Per City of Miami Beach sign criteria and approval of all necessary Governmental agencies.
|
|
Tenant Financials:
Guarantor(s):
|
This proposal is subject to Landlord’s review and approval of Tenant’s financial statements.
Full personal guaranty shall be required by all owners and spouses.
|
|
|
|
|
Brokers:
|
Danny Diaz with CBRE, INC. represents the Landlord, and the Tenant shall represent themselves in this transaction. Landlord shall pay a commission to CBRE in accordance with the Listing Agreement.
|
|
|
|
As contained in said Letter of Intent, the Base Rental Rate is $75.00 per square foot, with three percent (3%) annual increases. The Operating Expenses for the Anchor Shops building are estimated at $14.00 per square foot for 2022. The schedule of Base Rent and Operating Expenses due over the initial term are illustrated in the following chart:
|
|
Annual
|
Monthly
|
Annual Base Rent
|
Annual
|
Monthly
|
|
Year
|
Base Rent
|
Base Rent
|
Less Abatement
|
OPEX
|
OPEX
|
|
1
|
$ 202,275.00
|
$ 16,856.25
|
$ 16,856.25
|
$ 37,758.00
|
$ 3,146.50
|
|
2
|
$ 208,343.25
|
$ 17,361.94
|
$ 208,343.25
|
$ 38,890.74
|
$ 3,240.90
|
|
3
|
$ 214,593.55
|
$ 17,882.80
|
$ 214,593.55
|
$ 40,057.46
|
$ 3,338.12
|
|
4
|
$ 221,031.35
|
$ 18,419.28
|
$ 221,031.35
|
$ 41,259.19
|
$ 3,438.27
|
|
5
|
$ 227,662.29
|
$ 18,971.86
|
$ 227,662.29
|
$ 42,496.96
|
$ 3,541.41
|
|
6
|
$ 234,492.16
|
$ 19,541.01
|
$ 234,492.16
|
$ 43,771.87
|
$ 3,647.66
|
|
7
|
$ 241,526.93
|
$ 20,127.24
|
$ 241,526.93
|
$ 45,085.03
|
$ 3,757.09
|
|
8
|
$ 248,772.74
|
$ 20,731.06
|
$ 248,772.74
|
$ 46,437.58
|
$ 3,869.80
|
|
9
|
$ 256,235.92
|
$ 21,352.99
|
$ 256,235.92
|
$ 47,830.70
|
$ 3,985.89
|
|
(272 Days)
|
$ 196,676.86
|
$ 16,389.74
|
$ 196,676.86
|
$ 36,713.01
|
$ 3,059.42
|
|
Total
|
$ 2,251,610.05
|
$ 187,634.17
|
$ 2,066,191.30
|
$ 420,300.54
|
$ 35,025.05
|
The Leasing Brokerage Commission shall be in accordance with the City-approved Brokerage Agreement: four percent (4%) of the Base Rent, payable to the Broker in two installments, fifty percent (50%) upon lease execution, and fifty percent (50%) upon occupancy of the Premises by Tenant and Rent Commencement as illustrated in the following chart. The brokerage fees to be paid in FY 2023 will be:
|
CBRE Commission
|
|
Total Base Rent Years (1-5)
|
$ 1,073,905.45
|
|
4%
|
$ 42,956.22
|
|
Installment 1 (50%)
|
$ 21,478.11
|
|
Installment 2 (50%)
|
$ 21,478.11
|
|
| | |
| | | | | | | | ANALYSIS:
| Collins 1560, LLC d/b/a Lime Tree Café (Tenant) is an affiliate to Open Vision One, LLC. On July 20, 2022, the Chairperson and Members of the Miami Beach Redevelopment Agency adopted Resolution No. 671-2022, approving a Lease in substantial form with Open Vision One, LLC for use of approximately 4,236 square feet of ground floor retail space at the Anchor Shops and Garage, for a fine dining restaurant. Collins 1560, LLC d/b/a Lime Tree Café will provide the benefit of a shared Chef to service both locations. The proposed rent structure over the nine-year term will bring the City an estimated $2,486,491.84 over the term of the lease. This buildout would be a floor-to-ceiling remodel of the space, at the Tenant’s sole cost and expense, with new hood exhaust and grease trap, which will be part of the construction of the neighboring restaurant’s schedule of values. |
| | |
| | | | | | | | CONCLUSION:
| | The Administration recommends the Finance and Economic Resiliency Committee approve in favor of presenting this item before City Commission for a new lease agreement with Collins 1560, LLC d/b/a Lime Tree Café to bring an Italian/French Fusion Café to the Anchor Shops and Garage. In accordance with the above essential terms and conditions of the proposed Lease Agreement, the Lease would provide 1) competitive rental rate and favorable lease terms and; 2) Tenant’s acceptance of the premises in “as-is” condition, which are comparable to current market trends. |
| | |
| | | | | | | | Applicable Area
| | South Beach |
| | |
| | | | | | | | | Is this a "Residents Right to Know" item, pursuant to City Code Section 2-14? | | Does this item utilize G.O. Bond Funds? | | | No | | No | |
| | |
|