Here are the numbers behind Michael Dell’s record purchase of the Boca Raton Resort

Total purchase price, including furniture, fixtures, equipment and Premier Club, comes out to $875M

Miami /
Jun.June 12, 2019 06:15 PM
Michael Dell and the Boca Raton Resort & Club

Michael Dell and the Boca Raton Resort & Club

UPDATED, June 13, 1:25 p.m.: Billionaire Michael Dell’s MSD Partners is planning to invest $75 million into the Boca Raton Resort & Spa, according to a Fitch Ratings report that reveals a financial breakdown of the operations of the oceanfront resort.

The 1,047-room resort, whose real estate sold for $462 million in May, sold for a combined $875 million, according to Fitch Ratings. That price breaks down to $589.7 million for the resort, including furniture, fixtures and equipment, and $285.3 million for the Premier Club. The social club offers its 11,000 members access to all the resort’s amenities and the Boca Country Club. It accounted for about 19 percent of the resort’s revenue in 2018, according to Fitch.

MSD Partners is under the umbrella of MSD Capital, a private investment firm created to manage the assets of the Dell Technologies founder and his family’s assets. The company also owns the Four Seasons Resorts Maui at Wailea, Four Seasons Resort Hualalai, and the Fairmont Miramar hotel in Santa Monica.

Dell’s firm financed the $875 million purchase with a $600 million loan from Goldman Sachs, and put nearly $280 million of buyer equity into the deal. The two-year, floating-rate loan will be sold to investors, according to the Fitch report.

Over the first four years of the loan term, MSD Partners plans to renovate the main resort and its Boca Beach Club through room renovations, redeveloping the public space, and amenity upgrades.

The property includes a full-service spa, three fitness centers, 18 tennis courts, 13 food and beverage outlets, an 18-hole golf course, seven swimming pools with one FlowRider wave simulator, a 32-slip marina and about 116,000 square feet of indoor meeting space.

The Blackstone Group sold the Addison Mizner-designed resort to Dell’s firm. Blackstone invested more than $300 million into renovating the property in the 15 years since it acquired it as part of a $1.25 billion deal that included four additional resorts.

The latest sale marks one of the largest hotel trades in South Florida in recent years. But the property has “historically underperformed its competitive set in terms of room revenue,” according to the report.

About 60 percent of the resort’s room demand in 2018 came from meeting and group business — above the 49 percent average for the overall hotel market. Meeting and group bookings are at lower rates than leisure bookings, which brings down the Boca Resort’s overall room revenue, according to the report.

Hilton’s management agreement to operate the hotel as a Waldorf Astoria began in 2013 and ends in December 2033, according to the Fitch Ratings report. Hilton gets a base management fee of 2 percent of total revenue, as well as a brand services fee equal to 4 percent of room revenue, and an incentive fee.

Fitch Ratings said the appraised value of the property was $906 million as of May with a projected value of more than $1 billion in two years.

The Commercial Observer first reported the $875 million purchase price.


Related Articles

arrow_forward_ios
Waterfront Boca Raton property (NE 32nd Street LLC, Getty)
Developer asks $43M for waterfront Boca home sites
Developer asks $43M for waterfront Boca home sites
Montford Group' Sunju Patel and Opterra Capital Glenn Alba with 2940 Collins Avenue (Montford Group, Getty)
Montford, Opterra JV buys Hilton Garden Inn Miami Beach for $28M
Montford, Opterra JV buys Hilton Garden Inn Miami Beach for $28M
Joseph Chetrit and The Tides South Beach (Getty, The Tides South Beach)
Chetrit’s lender scores victory in South Beach hotel foreclosure
Chetrit’s lender scores victory in South Beach hotel foreclosure
From left: Vladislav “Bobby” Yampolsky and Robert P. Kelly along with an aerial view of 419 East Coconut Palm Road (Getty Images, Google Maps)
Luxury retailer buys waterfront Boca Raton home for $9M
Luxury retailer buys waterfront Boca Raton home for $9M
100 Fairway Drive, Deerfield Beach with Ally Visram and Howard Wurzak (Wurzak Hotel Group, Google Maps)
Wurzak buys Deerfield Beach DoubleTree for $27M
Wurzak buys Deerfield Beach DoubleTree for $27M
Allied Partners' Eric Hadar and RH's Gary Friedman with the Savoy hotel (Allied Partners, Getty, Google Maps)
Inside RH’s plans for $100M renovation of Miami Beach hotel
Inside RH’s plans for $100M renovation of Miami Beach hotel
Moto Capital Group's Marcos Lima with 350 Ocean Drive (Loopnet, LinkedIn, Getty)
Toronto firm picks up Ocean Drive hotel for $39M
Toronto firm picks up Ocean Drive hotel for $39M
Red South Beach at 3010 Collins Avenue, Tom Assouline and August “Gussie” Busch (Instagram/gussiebusch, Google Maps, Getty)
Busch family partners with Assouline Capital to buy Red South Beach hotel
Busch family partners with Assouline Capital to buy Red South Beach hotel
arrow_forward_ios

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

Loading...