Shore Club changes hands in $175M transaction

Shore Club hotel
Shore Club hotel

Ownership of the iconic Shore Club hotel in South Beach changed hands in a $175.3 million transaction, The Real Deal has learned.

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, on Monday, according to Miami-Dade County records. The county recorded the deed on Tuesday.

The transaction was the most expensive involving a South Florida hotel in 2013.

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. Calls to Feldman were not immediately returned.

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.

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Those mortgages were obtained by Philips South Beach in June to resolve a lengthy foreclosure case. The company, managed by private real estate development and management firm Philips International, faced a June 25 online foreclosure auction of the property if it did not obtain new financing.

Philips International had a majority stake in the 309-room hotel. A source familiar with the transaction told The Real Deal on Friday that Philips also has a stake in the new ownership entity.

Hospitality operator Morgans Hotel Group handles guest operations at the Shore Club and has a minority interest of about seven percent in Philips South Beach, according to Securities and Exchange Commission filings. Morgans’ website currently offers nightly room rates starting at $319.

The company’s most recent quarterly report, filed in November, hinted at a potential management or ownership shakeup. Morgans “continues to operate the hotel pursuant to the management agreement, but no assurance can be provided that [it] will continue to do so,” the company said in the quarterly filing.

The Shore Club was constructed in 1938. The 2.7-acre property last sold for $8.8 million in 1997.