Boca Raton: Mizner Park ground lease buyout being discussed

By Mary Hladky

Mizner Park’s owner, Brookfield Property Partners, is considering exercising its option to buy much of the land underneath the shopping and dining destination from the city.
The sale of the so-called retail lease, one of four 99-year Mizner Park ground leases, could be a financial boon to the city. But it is impossible to know now how much the city could realize.
Brookfield owns the buildings and parking garages in Mizner Park. The Community Redevelopment Agency owns the land underneath them.
At the time Mizner Park was developed, the city granted whoever owns the buildings sitting on the retail lease the right to purchase the land beginning in 2016.
The city had discussions with Mizner Park’s previous owner, General Growth Properties, but that company decided not to buy.
The city’s option to purchase states that the building owner must notify the city it is exercising its option and submit its estimate of fair market value of the land. If the city disagrees, fair market value will be determined by arbitration.
An entity controlled by Brookfield notified the Community Redevelopment Agency in a Sept. 26 letter that it is considering exercising its option. But before it can do so, it must be certain the city and Brookfield agree on how to calculate fair market value, the letter states.
The city and Brookfield disagree on how to do that. City Attorney Diana Grub Frieser told Boca Raton City Council members on Nov. 13 that Brookfield has filed a formal demand with the American Arbitration Association seeking a decision on how to calculate fair market value.
Frieser contends Brookfield is not entitled to arbitrate now “for a series of reasons.” One of them is that Brookfield has not submitted a fair market value estimate. She said the city has hired an outside lawyer to protect its interests.
Stripping away the legalese, the dispute boils down to this: Both the city and Brookfield want to get the best of any final resolution.
Brookfield wants the fair market value to be low, based on current Mizner Park buildings and tenants. That would result in a low purchase price.
The city wants the fair market value to be high, based on how the property could be redeveloped. That would result in a higher purchase price.
“The city wants the maximum value on the property and Brookfield wants the minimum and therein lies the argument,” said Assistant City Manager Mike Woika.
It is unclear if Brookfield is seriously interested in buying the land, or if it is simply testing the waters.
Its attorney who sent the letter, Mitchell Berger, did not return calls or an email requesting comment. A Brookfield official in New York City also did not return a call and an email.
Brookfield, the real estate arm of Toronto-based Brookfield Asset Management Inc., gained full control of General Growth Properties, the second-largest U.S. mall owner, in March for $9.25 billion in cash. It previously had owned about one-third of GGP.
Mizner Park, which replaced the failing Boca Raton Mall, opened in 1991 in an effort to breathe new life into a dying downtown. The development was accomplished by a public/private partnership of the city, CRA, developer Crocker Partners and cultural users.

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