The Real Deal Miami

South Florida’s biggest hotel trades of 2016

Buyers ranged from institutional companies to Qatari investors
By Sean Stewart-Muniz | December 28, 2016 04:40PM

From South Beach to Fort Lauderdale, hotel properties were hot tickets in South Florida’s commercial real estate market this year, often fetching top dollar from investors looking to grow their foothold in the region.

Even with news of a possible oversupply in some cities and the Zika virus hurting tourism, the hospitality industry was the grounds for many of South Florida’s priciest real estate deals in 2016. The Real Deal compiled the five most-expensive hotel trades that closed this year for your reading pleasure.

The Thompson Miami Beach

#1 The Confidante: $229.4M

Hyatt Hotels earned the top spot on this year’s list with its $229.4 million purchase of the Thompson Miami Beach, an oceanfront three-tower hotel with 380 rooms at 4041 Collins Avenue.

The deal proved to be an opportunity too good to pass up for Hyatt, which was looking to bolster its fledgling “Unbound Collection” that sought to roll individually branded trophy properties into the company’s portfolio.

After announcing its purchase contract in March, Hyatt sealed the deal with seller Geolo Capital a month later in April. The deal broke down to an eye-popping $603,684 per room — $379,684 per room more than Geolo paid for the property in 2012.

Geolo had already sunk $82 million into renovations for the hotel by the time the deal went through, on top of its original purchase price of $85 million. The property first opened its doors in 1940.

Along with the hotel, Hyatt’s acquisition also came with a mixed-use parking garage at 228 West 40th Street.

Pier Sixty-Six hotel

#2 Hyatt Regency, Pier Sixty-Six: $163.27M

In one of the biggest Fort Lauderdale commercial deals struck this year, Orlando’s Tavistock Development Company bought the city’s landmark Hyatt Regency Pier Sixty-Six hotel for $163.27 million in cash.

The seller was New York’s Blackstone Group, which acquired both Pier Sixty-Six and two other hospitality properties in 2004 for a combined $1.25 million.

Blackstone began shopping the 384-room hotel and its 127-slip marina in February with commercial brokerage CBRE. There was no official asking price, though the listing agents said at the time it could have fetched roughly $200 million.

Though the final price was considerably lower than that sum, the deal still broke down to a sizable $425,182 per room. It closed in December. The hotel is best known for its rotating rooftop ballroom, which offers 360-degree views of Fort Lauderdale’s skyline.

Tavistock also scored a development opportunity with the purchase: the property already has approvals for two 11-story residential buildings with a combined 58 units, along with retail and office space measuring 30,000 square feet. The company is expected to announce its plans for the property next year.

Aloft South Beach and Jason Halpern

#3 Aloft South Beach: $105M

Sliding into the No. 3 spot this year was Jason Halpern and Mitchell Hochberg’s $105 million sale of their newly built Aloft South Beach hotel to the Rockpoint Group in September.

The hotel had opened just a year prior in June 2015. But as Halpern told The Real Deal at the time of the sale, they saw the hospitality market was overheated and wanted to exit their position and look for new opportunities.

Located at 2360 Collins Avenue, the eight-story hotel has 235 rooms and is across the street from the beach. It’s also home to Stephen Starr restaurant called Continental Miami. The deal broke down to $446,809 per room.

The developers originally envisioned a residential project on the site when they bought it for $12.85 million in 2005, but those plans changed when the recession hit a few years later.

But while Halpern seemed concerned about the hotel market’s bulging supply pipeline, Rockpoint is doubling down on commercial investments in South Florida. The company grabbed headlines last year when it paid $113.5 million for Mary Brickell Village, a nearly 200,000-square-foot shopping center.

Former Viceroy Miami hotel’s pool deck

#4 Viceroy Tower: $64.5M

The Miami hospitality market’s largest foreign investment deal came in June this year when Al Faisal Holding Co., one of Qatar’s largest private industry groups, scooped up the Viceroy Miami for $64.5 million.

Al Faisal’s purchase brought in $435,810 per room for the seller, Pebblebrook Hotel Trust, which had bought the 148-room hotel for $37 million in 2011.

Along with the change in ownership, the hotel’s Viceroy name was dropped in favor of Starwood Hotel & Resort’s W Hotels brand. Plans for a major renovation were announced, including the transformation of its 50th-floor rooftop into a cocktail lounge.

The purchase marked Al Faisal’s fifth in the U.S., and second in Miami. Its first was the St. Regis Bal Harbour, which the group bought for $213 million in 2014.

Miami’s boosters said the sale showed foreign investors were still hungry for properties here, even as financial markets abroad stumbled.

Bullishness aside, Al Rayyan inherited a big problem after the deal closed: the pool deck it shares with Icon Brickell will be closed for repairs over the next 12 months or more. The lack of a pool could potentially put a damper on bookings for the W — some realtors have reported it’s already having a negative impact on asking prices for the complex’s condos.

The Sagamore Hotel

#5 Sagamore Hotel: $63M

Last but certainly not least was the Taplin family’s controversial sale of its Sagamore Hotel in Miami Beach to the InSite Group for $63 million.

In March, the art-centric beachfront hotel was quietly being marketed for sale in the neighborhood of $60 million by its owners, Martin Taplin and his son-in-law Neil Sazant. News of the 93-room hotel’s offering came at a difficult time for the Taplin family, which had already faced a foreclosure filing on the hotel in 2011 and was under increasing financial strain.

Then, within hours of signing a contract to sell the Sagamore to InSite, Martin Taplin fell to his death from the 25th-floor balcony of his step-mother’s Bal Harbour condo in an apparent suicide.

That tragedy did not stop a wave of conflicts on the long road to closing day, including allegations of an existing purchase contract from competing bidder Merchants Hospitality.

Merchants said it settled with executors of the estate, and InSite ended up closing the deal in April. At $63 million, the Sagamore sold for roughly $677,419 per room.