Letter to Alexander I. Tachmes, Esq, RE: Lease Agreement MIAMI BEACH
City of Miami Beath, 1700 Convention Center Drive,Miami Beach, Florida 33139,www.miamibeachfl.gov
Jimmy L. Morales, City Manager
Tel: 305-673-7010, Fax: 305-673-7782
January 22, 2014
Alexander I. Tachmes, Esq.
SHUTTS & BOWEN LLP
1500 Miami Center
201 South Biscayne Boulevard
Miami, Florida 33131
Re: Agreement of Lease (the "Ground Lease"), dated December 1, 1999, by
and between the Owner, City of Miami Beach, Florida ("City"), and
Pelican Investment Holdings, LLC, a Florida limited liability company
("Tenant" or "Assignor"), with respect to property located at 1027 Collins
Avenue, Miami Beach, Florida and 1041 Collins Avenue, Miami Beach,
Florida (the "Pelican Garage Project");
Proposed Sale of LIPT Collins Avenue, LLC, a Delaware limited liability
company, which is a wholly owned subsidiary of Jones Lang LaSalle
Income Property Trust, Inc. ("Assignee")
Dear Mr. Tachmes:
Thank you for your Offer Notice received by our Staff on October 29, 2013, via e-mail,
notifying the City of Tenant's intent to sell all of Tenant's leasehold interest in the Pelican
Garage Project, for the initial offer, in the total sum of $22,500,000.00 ("Offer"). This
letter shall confirm that, pursuant to City Resolution No. 2013-28438, attached and
incorporated as Exhibit "A" hereto, the City has elected not to consummate a Right of
First Offer Transaction under the Ground. Lease, thereby allowing the Assignor to
consummate the Sale with Section 36.2 of the Assignee, subject to and conditioned
upon the provisions set forth in Articles 10 and 36 of the Ground Lease.
The following shall also confirm that subsequent to the. Offer, and as disclosed by
Tenant on the record during the December 11, 2013 City Commission Meeting, the sales
price could be changed up or down by ten percent (10%). The Offer has subsequently
been reduced by the total sum of $450,000.00, for a new sales price, in the total sum of
$22,050,000.00 ("Modified Offer"). Since this reduction constitutes approximately 2% of
the Offer, -said reduction does not constitute a material change in the Offer, and
therefore the City will not be seeking to consummate a Right of First Offer with respect to
the Modified Offer.
Letter to Tachmes
The Pelican Garage Project
Right of First Offer Transaction
January 22, 2014
Page 2
Should you have any questions, please do not hesitate to contact Raul Aguila in our City
Attorney's Office at 305-673-7000 Extension 6475, or Gisela Nanson Torres, Leasing
Specialist of the City's Office of Real Estate, at Extension 6955.
Si cerely,
Ji my L.Worales
Cit, Manager
JL /KGB/MS/gnt
cc: Kathie G. Brooks, Assistant City Manager
Max Sklar, Director for Tourism, Culture and Economic Development Department
Raul Aguila, Chief Deputy City Attorney
Gisela Nanson Torres, Leasing Specialist
Mr. Daniel Unger
Fort Capital Management
176 NE 43rd Street
Miami, Florida 33137
F:/RHCD/$ALUECON/$ALL/ASSET/ASSET/PELICAN GARAGE/SALE TO JONES LANG LASALLE/PELICAN GARAGE
-CITY MANAGER'S REJECTION OF RIGHT OF FIRST OFFER(FINAL 1-22-14)
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RESOLUTION NO. 2013-28438
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA AUTHORIZING THE CITY MANAGER TO
DECLINE, IN WRITING, THE RIGHT OF FIRST OFFER TRANSACTION,
AS REQUIRED PURSUANT TO THE TERMS OF SECTION 36.2 OF THE
AGREEMENT OF LEASE ("LEASE") BETWEEN THE CITY ("OWNER")
AND PELICAN INVESTMENT HOLDINGS, LLC ("TENANT"), DATED AS
OF DECEMBER 1, 1999, INVOLVING THE IMPROVEMENTS TO
PROPERTY (THE "PROJECT") LOCATED AT 1027 COLLINS AVENUE,
MIAMI BEACH, FLORIDA,AND 1041 COLLINS AVENUE,MIAMI BEACH,
FLORIDA; AND FURTHER APPROVING TENANT'S SALE OF THE
PROJECT TO THE PROPOSED PURCHASER, LIPT COLLINS AVENUE,
LLC, A DELAWARE LIMITED LIABILITY CORPORATION, WHICH IS A
WHOLLY OWNED SUBSIDIARY OF JONES LANG LASALLE INCOME
PROPERTY TRUST, INC.,SUBJECT TO AND CONDITIONED UPON CITY
STAFF'S SUCCESSFUL COMPLETION OF ITS EVALUATION OF THE
PROPOSED PURCHASER IN ACCORDANCE WITH ARTICLE 10 OF THE
LEASE (THE "CITY'S DUE DILIGENCE"); PAYMENT TO THE CITY OF
ITS REASONABLE COSTS INCURRED IN CONNECTION WITH THE
PROPOSED SALE INCLUDING, WITHOUT LIMITATION,
REIMBURSEMENT OF THE CITY'S DUE DILIGENCE COSTS; AND
PAYMENT TO THE CITY OF THE "SETTLEMENT OFFER" (AS SUCH
TERM IS HEREINAFTER DEFINED IN THIS RESOLUTION); AND
FURTHER AUTHORIZING THE CITY MANAGER AND CITY CLERK TO
EXECUTE ANY AND ALL CLOSING DOCUMENTS ON BEHALF OF THE
CITY IN CONNECTION WITH THE PROPOSED SALE.
WHEREAS, on January 5, 1998, the City issued Request for Proposals No. 20-
97/98, seeking proposals for the development of Public-Private Parking Facilities (the
RFP); on April 6, 1998, proposals from five (5) different development teams were
submitted and evaluated by an Evaluation Committee; and on July 15, 1998, the City
Commission authorized negotiations with four(4) of the proposed development projects;
and
WHEREAS, as a result of said negotiations, on October 20, 1999, the Mayor and
City Commission adopted Resolution No. 99-23372,approving an Agreement of Lease(the
"Lease")and Development Agreement between the City and Pelican Development LLC,for
development of a public parking garage with ground floor retail space(not to exceed 5,000
square feet), on the City-owned land located at 1027 Collins Avenue, and 1041 Collins
Avenue (the "Project"); and
WHEREAS, an Agreement of Lease (the "Lease") was executed between the City
("Owner") and Pelican Development, LLC, dated as of December 1, 1999; and
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WHEREAS, on or about June 1, 2004,the Project was sold and transferred from the
original tenant, Pelican Development to Ocean Blvd II, LLC, an Indiana limited liability
company, and on or about May 27, 2010, the Project was sold and transferred from Ocean
Blvd II, LLC to the current tenant, Pelican Investment Holdings, LLC, a Florida limited
liability company ("Tenant"); and
WHEREAS, in accordance with Article 10 of the Lease, on October 29, 2013, the
Tenant notified the City in writing ("Offer"), requesting the City's consent to the proposed
sale and assignment of Tenant's 100% interest in the Project (the"Sale") to a real estate
investment trust, LIPT Collins Avenue, LLC, a Delaware limited liability corporation,which
is a wholly owned subsidiary of Jones Lang LaSalle Income Property Trust, Inc. ("Proposed
Purchaser"), for a total cash sum of$22,500,000.00 ("Purchase Price"); and
WHEREAS, pursuant to Section 26.2(c)(iii) of the Lease, the City has until
December 26, 2013, in which to approve or disapprove of the Sale of the Project to the
Proposed Purchaser; and
WHEREAS, in accordance with Section 36.2 of the Lease, "Owner's Reciprocal
Right of First Refusal", the City also has the right to elect, in writing, whether to
consummate the Right of First Offer Transaction, at the same price and upon such other
material terms set forth in the Offer Notice ("Offer"); the City has until December 13, 2013
to exercise this Right of First Refusal; and
WHEREAS, the Lease is also subject to a 1999 settlement agreement with KTKL
Corporation (the"KTKL Settlement"), under which the City is obligated, for a term of thirty
years (which commenced on October 31, 2002), to pay KTKL for the City's lease of 28
spaces (the "KTKL Spaces") in the Project; and
WHEREAS, although the KTKL Spaces have been historically utilized by the Tenant
since the opening of the Project, the Proposed Purchaser, as part of its due diligence, is
requesting an estoppel certificate from the City, which among other matters,'representing
that, during the remaining Term of the Lease, the City will continue not to utilize the KTKL
Spaces; and
WHEREAS, following negotiations with City staff, the Tenant has offered the City
the total sum of $250,000.00, as consideration for said representation and agreement
("Settlement Offer"); and
WHEREAS, after considering the revenue figures from surrounding City-owned and
managed parking garages (as compared to the Project garage, which is a privately
managed garage); the financials for the Project; the $250,000.00 Settlement Offer to the
City; and the expense of the annual KTKL Settlement payments, City staff determined that
it would take the City 14.70 years to break even if the City exercised the Owner's '
Reciprocal Right of First Refusal; and
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WHEREAS, based upon the fact that the Offer materially exceeds the cost per
space to construct a City-owned parking facility and,further,that the Project will revert back
to the City at the end of the Lease term, the Administration is not prepared to recommend
that the City exercise the Reciprocal Right of First Offer Transaction; and
WHEREAS, the Administration further recommends that the City Commission
approve the proposed Sale of the Project to the Proposed Purchaser, Jones Lang LaSalle
Income Property Trust, Inc., subject to City staff's successful completion of the City's Due
Diligence, Tenant's payment of the City's Due Diligence costs, and payment to the City of
the Settlement Offer.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City
Commission hereby authorize the City Manager to decline, in writing, the Right of First
Offer Transaction, as required pursuant to the terms of Section 36.2 of the Agreement of
Lease ("Ground Lease") between City ("Owner") and Pelican Investment Holdings, LLC
("Tenant"), dated as of December 1, 1999, involving the improvements to Property (the
"Project") located at 1027 Collins Avenue, Miami Beach, Florida, and 1041 Collins Avenue,
Miami Beach, Florida; and further approve the Sale of the Project to the Proposed
Purchaser, LIPT Collins Avenue, LLC, a Delaware limited liability corporation, which is a
wholly owned subsidiary of Jones Lang LaSalle Income Property Trust, Inc., subject to and
conditioned upon City staff's successful completion of its evaluation of the Proposed
Purchaser in accordance with Article 10 of the Lease (the "City's Due Diligence"); and
payment to the City of its reasonable costs incurred in connection with the proposed Sale
including, without limitation, reimbursement of the City's Due Diligence costs and payment
of the Settlement Offer; and further authorizing the City Manager and City Clerk to execute
any and all closing documents on behalf of the City.
PASSED and ADOPTED this 11th day of December 2013.
MAY
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