Good-bye $49.5 million: Port St. Lucie Council OKs $14.5 million deal for VGTI building

PORT ST. LUCIE — The city may finally be able to unload the former Vaccine & Gene Therapy Institute Florida building before the new year.

The City Council voted 4-1 Monday to approve an agreement to sell the high-tech laboratory and office building for $14.5 million to RER Ventures LLC, a distressed real estate firm based in Coral Gables.

The delivery of the agreement to RER Ventures will trigger a 90-day due diligence period. After that, the sale would close within 30 days.

Christopher Kallivokas, the chairman of RER Ventures, said he hopes to complete the due diligence investigation early and close the deal in December.

"I put the energy in it this year and want to get started," Kallivokas said in an interview after the vote. "I'm excited about the property. Once we reach the final decision to go forward, we should go forward."

Moments earlier, Kallivokas told the council, "This is a good opportunity for us. I hope we will stabilize the building and create some good jobs for this community and I look forward to being a part of this community."

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The December closing would finalize the public's $49.5 million loss on the building, which was custom built for VGTI.

Mayor Greg Oravec, the lone dissenter on the vote, said he had confidence in Kallivokas, but certain aspects of the deal bothered him.

"I think he's the real deal, he's a bona fide developer, the kind of investor we want in the city, but I will not be supporting this deal," Oravec said.

Oravec said he was surprised to learn Kallivokas is a business partner in a separate deal with a principal in the Avison Young brokerage firm that lined up Kallivokas as a buyer for VGTI. But Oravec acknowledged, "There is no technical conflict of interest."

A subsequent conversation with a prominent Realtor convinced him there was a flaw in the $14.5 million independent appraisal of the building, Oravec said.

"It would be worth a lot more once it's leased with A-rated or dependable tenants where the building could be sold to a (Real Estate Investment Trust) or another real estate investor at the going capitalization rate at the time," Oravec said.

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"I think he's going to get tenants in the building and I think in the next three to five years, or whenever he decides to sell, he's going to sell it for somewhere between $24 and $34 million," Oravec said.

VGTI opened in 2012 and went out of business in 2015 after it ran out of money because of the loss of National Institutes of Health funding and the burden of loan repayments.

The city took ownership of the building in August 2017 because it had guaranteed the $64 million in bonds used to finance the construction.

The city still owes $57.3 million in principal on the bonds with annual payments of $4.1 million. The city is also paying $1.5 million this year to maintain and operate the building.

The city intends to use the proceeds from the sale to refinance the bonds. 

RTT Molecular Dx had also offered $14.5 million for the VGTI building, but could not provide proof it had the finances to complete the purchase, City Manager Russ Blackburn said Monday.

During the July 20 council meeting, RTT Molecular Dx's chairman, Robert M. Lloyd Jr., described the building as "the Taj Mahal of diagnostics."

More:Port St. Lucie City Council weighing competing offers for VGTI high-tech laboratory

RER Ventures offer

$14.5 million

$2.9 million down

$11.6 million balloon payment paid after five years

$580,000 per year interest (5 percent)

Florida Center for Bio-Sciences

Address: 9801 S.W. Discovery Way, Port St. Lucie

Building size: 107,000 square feet

Campus size: 8 acres

Facilities: Nine state-of-the-art laboratories, private offices, conference and lecture spaces, private cafe, vivarium

Annual loan payment: $4.1 million

2017-18 operating costs: $1.5 million 

Source: City of Port St. Lucie