RDA-1. - Approve Lease Amendment for Cubiche 105

Redevelopment Agency Items (RDA) 1

RDA-1. A RESOLUTION OF THE CHAIRPERSON AND MEMBERS OF THE MIAMI BEACH REDEVELOPMENT AGENCY (RDA), APPROVING, IN SUBSTANTIAL FORM, AMENDMENT NO. 3 (AMENDMENT) TO THE LEASE AGREEMENT BETWEEN THE RDA (LANDLORD), AND CUBICHE 105, LLC (TENANT), FOR USE OF APPROXIMATELY 7,130 SQUARE FEET OF GROUND FLOOR RETAIL SPACE AT THE ANCHOR SHOPS AND GARAGE, LOCATED AT 1555 WASHINGTON AVE, SUITE NOS. 1-3 (PREMISES), AS A FULL SERVICE RESTAURANT, SAID AMENDMENT ADJUSTING TENANT’S RENT SCHEDULE TO TEN PERCENT (10%) OF GROSS SALES IN LIEU OF THE CURRENT TRIPLE NET RENTS FOR A PERIOD OF FOUR (4) YEARS, FROM JANUARY 1, 2026 THROUGH DECEMBER 31, 2029, WITH ALL OTHER LEASE TERMS TO REMAIN IN EFFECT, TO ADDRESS TENANT’S FINANCIAL CONSTRAINTS AND TO FACILITATE PLANNED RENOVATIONS; AND CLARIFYING THAT TENANT’S RENEWAL OF THE LEASE TERM AS OF JANUARY 1, 2026 IS CONTINGENT UPON APPROVAL OF THE PROPOSED PERCENTAGE RENT STRUCTURE; AND FURTHER, AUTHORIZING THE EXECUTIVE DIRECTOR TO FINALIZE THE AMENDMENT; AND FURTHER, AUTHORIZING THE EXECUTIVE DIRECTOR AND SECRETARY TO EXECUTE THE AMENDMENT. Applicable Area:

COMMISSION MEMORANDUM

RECOMMENDATION

The Administration recommends the Chairperson and Members of the RDA hereby approves, in substantial form, Amendment No. 3 to the Lease Agreement.

BACKGROUND/HISTORY

On December 28, 2015, the Miami Beach Redevelopment Agency (“Landlord”) entered into a retail Lease Agreement with Cubiche 105, LLC (“Tenant”) for a full-service restaurant at the Anchor Shops and Garage, located at 1555 Washington Avenue, Suite Nos. 1–3. As corrected by Amendment No. 2, the Initial Lease Term runs through December 31, 2025, followed by two five-year renewal options.

During the COVID-19 period, the parties executed Amendment No. 1 to provide temporary relief by replacing Minimum Rent with a percentage-rent structure and offering a limited abatement, while the Tenant continued to pay Operating Expenses.

As operations stabilized, Amendment No. 2 resolved pending litigation, aligned the lease commencement and expiration dates, restarted Operating Expense adjustments beginning in 2024, and set the rent terms for the balance of the Initial Lease Term and the renewal periods, including Minimum Rent escalation and percentage-rent thresholds.

On September 5, 2025, the Tenant delivered a Lease Renewal Letter confirming its intention to exercise the First Renewal Option commencing January 1, 2026, and, in connection with the renewal, due to continued low foot traffic and weak sales along Washington Avenue, requested a rent structure of ten percent (10%) of Gross Sales during the renewal period to help manage

cash flow and complete targeted renovations..

ANALYSIS

Under Amendment No. 2, the First Renewal Option term runs from January 1, 2026 through December 31, 2030, with rent defined as the greater of Minimum Rent at $45.00 per square foot with a 3% annual increase starting January 1, 2026, estimated to total $651,325.50 over the two- year period, or Percentage Rent at 11% of Gross Sales, increasing to 12.5% above the stated breakpoint. All other lease provisions including use, insurance, reporting, construction standards, and lien protections will continue to apply without modification, and any planned renovations will proceed within that framework and in strict compliance with the Lease.

Due to the continued struggles of low foot traffic and weak sales along Washington Avenue, the Tenant’s projected sales are not at a level that would allow them to pay the triple net rent structure as planned. The Tenant is requesting Amendment No. 3 to the Lease, which would replace the rental structure approved in Amendment No. 2 and allow the Tenant to pay ten percent (10%) of gross sales for four (4) years (January 1, 2026 – December 31, 2029) with the expectations that traffic will grow substantially once the Tax Collector’s Office opens at Anchor Shops and Garage (such opening projected for 2026). All other terms and conditions of the Lease remain the same. The projected rent comparison for the first year (2026) schedule is as follows:

The proposed amendment reflects a practical response to the Tenant’s current financial constraints and planned renovations. The requested four-year percentage rent structure would provide stability to facilitate Tenant’s improvements to the Premises.

Granting a temporary percentage rent structure of 10% Gross Sales from January 1, 2026, through December 31, 2029, aligns lease obligations with the anticipated Premise improvements and supports the continued operation of a full-service restaurant at the Anchor Shops and Garage. It will also allow the City to assist a long-term Tenant to keep their lights on during these times of struggle and upon the conclusion of Amendment No. 3, the City and Tenant would negotiate new terms going forward under a new Lease Agreement to be effective January 1, 2030, but neither party would have any obligation to enter into such a new Lease Agreement.

FISCAL IMPACT STATEMENT

N/A

Does this Ordinance require a Business Impact Estimate? (FOR ORDINANCES ONLY)

If applicable, the Business Impact Estimate (BIE) was published on: See BIE at: https://www.miamibeachfl.gov/city-hall/city-clerk/meeting-notices/

FINANCIAL INFORMATION

CONCLUSION

The Administration recommends the Chairperson and Members of the RDA hereby approves, in substantial form, Amendment No. 3 to the Lease Agreement between the RDA (Landlord) and Cubiche 105, LLC (Tenant), adjusting Tenant’s monthly rent schedule to ten percent (10%) of Gross Sales in lieu of the current triple net rent terms for a period of four (4) years, from January 1, 2026 through December 31, 2029.

Applicable Area

South Beach

Was this Agenda Item initially requested by a lobbyist which, as defined in Code Sec. 2-481, includes a principal engaged in lobbying? No

If so, specify the name of lobbyist(s) and principal(s):

Department

Facilities and Fleet Management

Sponsor(s)

Co-sponsor(s)

Condensed Title

Approve Amendment 3 to Cubiche 105, LLC at 1555 Washington Ave, Adjust Rent to 10%. FF

Previous Action (For City Clerk Use Only)