The Real Deal Miami

Hottest hotel deals of 2014

The Westin Diplomat Resort & Spa, One Bal Harbour among hotels purchased

December 31, 2014 12:42PM
By Ina Cordle

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setai-resort

The Setai sold to the Nakash family for nearly $90 million.

Hospitality was a hot commodity this past year, as a host of hotel properties changed hands in South Florida.

From the legendary Bahia Mar and giant Westin Diplomat Resort & Spa in Broward County to the sedate One Bal Harbour, trendy Shore Club and elegant Setai in Miami Beach, buyers sought and bought hotel properties.

Here are five of the hottest deals in 2014:

Shore Club hotel

Shore Club hotel

Shore Club

The year began with a change in ownership of the storied Shore Club hotel in South Beach, in a $175.3 million transaction. The 309-room hotel was constructed in 1938.

New York-based Philips South Beach filed a special warranty deed transferring ownership of the 1901 Collins Avenue property to another New York company, Shore Club Property Owner. Shore Club Property is managed by New York-based HFZ Capital Group, according to state corporate records. HFZ is a real estate development and investment firm founded nine years ago by Ziel Feldman.

Two mortgage assignments were filed concurrently with the deed. A $161 million loan from a group of lenders managed by Fortress Credit Corporation was assumed by Shore Club Property Owner. A second note totaling $12 million from the same group of lenders was also assigned to the company. Those mortgages were obtained by Philips South Beach in June 2013 to resolve a lengthy foreclosure case. The company, managed by private real estate development and management firm Philips International, faced an online foreclosure auction of the property if it did not obtain new financing. Philips International had a majority stake in the 2.7-acre property, which last sold for $8.8 million in 1997.

Bahia Mar

Bahia Mar

Bahia Mar

In July, a group of South Florida real estate investors purchased the iconic Bahia Mar Resort and Marina in Fort Lauderdale with plans to upgrade the waterfront property and add shops, restaurants and condos.

Miami real estate developers, brothers Jimmy and Kenny Tate, co-owners of Tate Capital, and longtime friend Sergio Rok, president of Rok Acquisitions, along with Rialto Capital Management and RCI Marine, paid an undisclosed price for a long-term lease on the 39-acre parcel. Blackstone Group had owned the lease on the property set on the Intracoastal Waterway across from a public beach.

Dating back to 1966, the Bahia Mar now includes a 250-slip marina that can accommodate mega-yachts of up to 230 feet. It also has a 297-room DoubleTree by Hilton hotel in two buildings — all of which will remain in place. The location, at 801 Seabreeze Blvd., will also continue to be the site of the Fort Lauderdale International Boat Show, a major economic driver for South Florida, Jimmy Tate said.

Redevelopment, which requires approval by the city of Fort Lauderdale, could bring improvements to the marina and hotel. The new owners are considering adding a condo-hotel, restaurants, shops and offices, all in a park-line setting lining the waterfront, he said.

The Tate/Rok group is the controlling member of the investment group buying the Bahia Mar lease, collectively owning a 57.5 percent stake. Rialto, a subsidiary of Lennar, holds 37.5 percent and RCI Marine, 5 percent.

During the past five years, the Tate/Rok Group has worked on at least 18 investments totaling more than $600 million. Among the deals, Tate said, was the purchase of a $160 million debt instrument on the Omni in Miami, for which they paid $100 million; a 500,000 square-foot lifestyle center in Birmingham, Alabama; a 228-unit apartment complex near New Orleans; a 216-unit apartment complex in Myrtle Beach, South Carolina, and Publix shopping centers in Coral Springs and Nashville. Some of the deals included Jorge Perez, chairman of the Related Group, as a partner.

For the Bahia Mar deal, Tate/Rok invited Rialto Capital, which has experience in hotel ownership, into the deal. It is their second project together, following a new Walmart neighborhood grocery store under construction in Southwest Miami-Dade. Bahia Mar represents Tate/Rok’s first deal with RCI Marine, which owns and operates various marinas, including the Miami Beach Marina and the Coconut Grove Marina.

Blackstone acquired the Bahia Mar, along with other assets, in the $1.1 billion purchase of Boca Resorts in 2005. Boca Resorts had been founded by H. Wayne Huizenga in 1997. Other properties included in the sale to Blackstone were the Boca Raton Resort & Club and the Hyatt Regency Pier 66 Hotel and Marina.

For several years, Blackstone worked on putting together a $250 million plan to redevelop the Bahia Mar complex with a new five-star Waldorf-Astoria condo-hotel with up to 26 stories, a renovated hotel and a waterfront park. But it never came to fruition.

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Westin Diplomat Resort & Spa

The Westin Diplomat Resort & Spa

In August, Broward County’s largest hotel changed hands in a massive half-billion-dollar deal. The 998-unit Westin Diplomat Resort & Spa sold for $460 million to Diplomat Hotel Owner LLC, an affiliate of Thayer Lodging Group of Annapolis, Maryland.

Thayer is a private hotel investment group that also owns a stake in Interstate Hotels & Resorts, the nation’s largest independent hotel management company. It operates several hotels in South Florida.

The seller of the hotel at 3555 S. Ocean Drive was Diplomat Properties Limited Partnership, a company with ties to hotel owner United Association, a 370,000-member plumbers and pipefitters union, also based in Annapolis.

The resort’s neighboring 18-hole golf course in Hallandale Beach also was acquired by a Thayer affiliate — Diplomat Golf Course Ventures LLC— for $20 million. And another affiliate — Diplomat Landings Owner LLC — bought nearby commercial parcels along South Ocean Drive for $55.5 million.

In total, Thayer affiliates invested $535.5 million in the real estate transactions.

One parcel of land is already approved for a 372-unit condo-hotel and plans call for developing about 1,500 condos in multiple towers on the other vacant lots.

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One Bal Harbour Resort

 One Bal Harbour Resort & Spa

The Lionstone Group and Flag Luxury Group, owners of the Ritz-Carlton, South Beach, announced in September that they were acquiring One Bal Harbour Resort & Spa from One Bal Harbour Hotel Facilities, an entity owned by the One Bal Harbour Residential Condominium Association. Financial details about the acquisition were not disclosed.

Ritz-Carlton started managing the One Bal Harbour Resort & Spa on Oct. 2, making the 124-suite property the operator’s 10th in Florida. No major refurbishing or renovations to the 18-story tower, located at 10295 Collins Avenue, were planned. It is now known as the Ritz-Carlton Bal Harbour.

The resort’s amenities include a swimming pool, luxury cabanas with private hot tubs, a restaurant, pool bar and eatery and a 10,000-square-foot spa.

setai-feetch

The Setai

The Setai

The Nakash family, founders of the Jordache Jeans empire and owners of the old Versace mansion, purchased The Setai Hotel in South Beach in December, paying nearly $90 million to Lehman Brothers Holdings Inc. for the Art Deco hotel at 2001 Collins Avenue. 
“The Setai is the jewel of Miami,” a Nakash family representative told The Real Deal. “We plan to increase the level of service and operate to the highest standard of luxury.”
The latest acquisition adds to the family’s hotel portfolio in Miami Beach. Nakash Holdings owns Hotel Victor in addition to Casa Casuarina – formerly known as the Versace mansion – which the famed fashion family purchased in September 2013 for $41.5 million.
The Setai was built in the 1930s and then redesigned – along with an adjacent 40-story condo tower – by Jean Michel Gathy and Jaya Ibrahim in 2004. Miami-Dade public records show that, prior to the deal, the Nakash family had already owned more than 10 units in the tower. Nakash Holdings is the private investment office of the Nakash family. Their real estate portfolio consists of retail, office and multifamily properties.
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