Delays spell trouble for the Conrad Fort Lauderdale Beach

Miami /
Aug.August 31, 2016 05:30 PM

What was once a failed Trump-branded project on prime beachfront land appeared to be saved when a new developer swooped in three years ago with a grand plan.

But the fate of the Conrad Fort Lauderdale Beach now seems to be up in the air again, with the condo-hotel facing months of delays, a construction lien from its general contractor and an opening date that hinges on a yet-to-close refinancing deal.

Orchestra Hotels + Resorts, led by Andreas Ioannou and Jose Luis Zapata, bought out the languishing project at 551 North Fort Lauderdale Beach Boulevard for $115 million in 2013.

At the time, Orchestra’s plans were to spend $40 million on finishing and revamping the building into a modern tower with 290 units, split between 109 condos — dubbed the Ocean Resort Residences — and 181 condo-hotel units.

Hilton Worldwide’s Conrad Hotels and Resorts brand was also brought on to head the property’s leisure services and manage the condo-hotel units.

Fast forward three years, and those plans have changed. Ioannou told The Real Deal that the project’s budget is now closer to $70 million, with the extra expenditures going toward upgrading the building’s public areas to better compete with nearby upcoming luxury projects like Auberge Fort Lauderdale and the Four Seasons Hotel and Private Residences.

“We felt we had to do more to make sure we lead the market,” he said. “That has led to delays.”

Orchestra originally slated the Conrad to open in early 2015, though that date was pushed back several times and is still uncertain.

Ioannou said the opening hinges on refinancing Orchestra’s construction loan with a better interest rate — a deal he said should close within the next two weeks. Once the loan is in place, Hilton’s management team can begin the three-to-four month process of getting the hotel ready for opening.

In the meantime, the building’s units will sit untouched despite receiving a full certificate of occupancy from city officials in June. Ioannou said condo owners are allowed by law to occupy the condos, but without furnishings or a functioning hotel, there would be little point.

And according to Broward County records, the developer is now facing a $1.4 million construction lien from its general contractor, Moss & Associates. The firm declined to comment, but Ioannou said he can’t close any condo purchases until the lien is lifted. About 35 percent of the project has been sold, and Ioannou said roughly half of those deals have closed.

County records show closings began as early as 2014, meaning buyers at the project have waited years for the project to open. Meanwhile, Ioannou said, the development team has committed to covering property taxes and “share fees” for all units until the hotel opens.

Though Ioannou was optimistic that the project would move forward as intended, others familiar with the development said the warning light is blinking.

Philip Gutman, vice president of sales at Douglas Elliman’s development marketing division, said his firm and the developer parted ways after less than a year in 2014.

“I think the project was designed in an era that the condo-hotel model with smaller units worked,” Gutman told TRD. “We had some suggestions but [the developer] didn’t really work off of them, and finally Cervera took over when we left.”

Sales are now being handled by Cervera Real Estate, with prices starting in the $400,000s and ranging to more than $1 million.

It’s not unusual for projects to cycle through marketing firms during development, but Gutman said it was his firm that decided to cut the cord. Peggy Fucci’s brokerage One World Properties also headed sales at the Conrad for a brief period when the project first launched.

Over budget and delayed, Orchestra is now finding itself in a situation similar to the one that led the former owners to abandon the project. Formerly known as the Trump International Hotel & Tower, the project originally launched in 2004 with Roy Stillman’s SB Hotel Associates as the developer and a licensing agreement from Donald Trump.

But construction was halted amid a litigation firestorm between buyers looking to get their deposits back from a sinking ship and the developer, who ran out of financing before finishing.

The situation was messy: court documents reveal complaints from buyers who felt they were misled by marketing materials into thinking Trump was the developer. Trump fired off another suit at Stillman for an alleged breach of contract, stating he costed Trump millions of dollars and damaged his reputation.

When asked if Orchestra would sell the development, Iannou said, “That is not part of our business plan, though you should never say no if someone comes in and wants to spend a lot of money. Our objective is to keep the hotel for years to come.”


Related Articles

arrow_forward_ios
Rendering of the project

Fort Lauderdale OKs plan for Bahia Cabana Hotel on the beach

Fort Lauderdale OKs plan for Bahia Cabana Hotel on the beach
From left to right: 3333 South Port Royale Drive in Fort Lauderdale with Invesco CEO Martin Flanagan and Mill Creek CEO William MacDonald (Invesco, Mill Creek)

Mill Creek, Invesco sell Fort Lauderdale apartments for $180M

Mill Creek, Invesco sell Fort Lauderdale apartments for $180M
Matthew Karch and Auberge Beach Residences & Spa (Embracer Group, Google Maps)

Video game CEO spends $10M on Fort Lauderdale condo

Video game CEO spends $10M on Fort Lauderdale condo
Jonathan Fish and a rendering of the project

Fort Lauderdale mixed-use project eyes March groundbreaking

Fort Lauderdale mixed-use project eyes March groundbreaking
Michael and Andrea Kallberg & 400 Royal Plaza Drive, Fort Lauderdale (Credit: Google Maps)

Disaster response firm owners sell Las Olas Isles mansion at a slight loss

Disaster response firm owners sell Las Olas Isles mansion at a slight loss
Publix CEO Todd Jones and a rendering of the project

Publix in Fort Lauderdale Beach moves forward

Publix in Fort Lauderdale Beach moves forward
601-607 Northeast 29th Drive and 999 Northeast 23rd Drive (Google Maps)

Investors pay $13M for multifamily portfolio in Fort Lauderdale, Wilton Manors

Investors pay $13M for multifamily portfolio in Fort Lauderdale, Wilton Manors
Mike Napoli and 2501 Delmar Place (Getty, Coldwell Banker)

He’s out: Baseball’s Mike Napoli sells waterfront Fort Lauderdale mansion for $7M

He’s out: Baseball’s Mike Napoli sells waterfront Fort Lauderdale mansion for $7M
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...