Property records revealed Friday the price of a Massachusetts-based company’s hotel acquisition in Pompano Beach: $24.8 million. In September, the Claremont Companies acquired the Residence Inn by Marriott for an unknown amount and began managing the property, which has a litigious history dating back to 2002.
At the time of the sale, $21.5 million in financing for the deal was issued by U.S. National Bank. The newly released price breaks down to $281,818 per room. The beachfront hotel, at 1350 North Ocean Boulevard, has 88 hotel rooms, a wedding chapel, two swimming pools, an on-site restaurant and 2,500 square feet of conference space.
Its largest amenity is a 20,000 square foot fitness and spa facility. It was once an independent condo-hotel called the Spa Atlantis Ocean Resort, where investors purchased units and leased them back to the management, which would then rent them out to guests. But a 2003 federal lawsuit alleged the management, Spa Atlantis LLC and Chai Development LLC, stiffed the owners for their payments.
The suit was eventually dismissed in 2005: it’s unknown what agreement the two parties reached, but Chai sold off all the units in bulk to a Minnesota company that same year. Mercury Investment, the property’s new owner, re-branded the condo-hotel as Ocean Sands Spa & Resort Residences, and later brought on Concord Hospitality Enterprises and Aztec Group as partners in 2009.
Then in 2010, the hotel underwent its final re-branding as the Residence Inn by Marriott Pompano Beach/Oceanfront, under which it operates today.
West Palm Beach agreed to sell the site of its former city hall to developer Navarro Lowery for a mixed-used project anchored by an AC Hotel.The city commission approved the $11.5 million sales contract on Jan. 4 for the 2.3-acre site at 200 2nd Street, which has a water view. The deal also includes $1.5 million in tax increment repayments over five years plus a $1 million construction incentive through the city’s community reinvestment agency. The city agreed to approve the 410,000-square-foot project within 60 days of it being submitted.Meanwhile, the CRA will lease the neighboring waterfront site to Navarro Lowery for a restaurant and open space.The deals can close once development approvals are in place.
The development plan calls for a 180-room AC by Marriott Hotel, 6,500 square feet of meeting rooms, a rooftop bar and pool deck, 295 units for either live-work apartments or office suites, and 36,000 square feet of retail, including the 5,000-square-foot restaurant overlooking the water. It would have a 416-space parking garage.
Navarro Lowery, led by Frank E. Navarro, plans to transfer the hotel ownership to Concord Hospitality, according to city documents
Robert Finvarb, whose development company has two hotels about to open on Miami Beach, discusses the superheated hotel scene in Miami.
With two hotel construction projects coming in for a landing, developer Robert Finvarb was sounding confident during an interview earlier this month.
Construction of both properties — the Hyatt South Beach and AC Hotel Miami Beach, both set to open in April — was running on schedule, no easy task in a market flooded with renovation and new building projects in recent years.
“I pride myself on that,” said Finvarb, a Miami Beach native. “This is all we do.”
After graduating from law school and working for nine years as an attorney, including for South Florida developers, Finvarb founded real estate investment and development company Robert Finvarb Companies, where he is president and CEO.
In an interview at the company’s Courtyard by Marriott South Beach at 1530 Washington Ave., Finvarb talked about the popularity of the area for investors, the advantages of being a local surrounded by outside developers and the challenges of landing a project (not to mention two) on time.
Q. What led you to start your business here in 2002?
A. Just the familiarity of the area, and actually my dad and I collaborated on this project with my brother. It was an emerging area of South Beach. This Washington Avenue corridor was dark, dingy, dirty. And as we’ve seen in many other markets that we’ve developed, it became an economic engine for this little part of South Beach because it legitimizes it.
And one thing that developers have is a herd mentality of following those that pioneer certain areas. Look at Wynwood, look at Design District. And I’m not going to put this on par with what the Goldmans did in Wynwood or what Craig Robins did in Design District, but this was our little opportunity to gentrify this area. We’ve done the same thing in D.C., we’ve done the same thing in other markets where they’ve been urban emerging markets and we’ve put Marriott hotels in areas that people did not associate as a destination for business or leisure travel.
Q. And how have you seen, down here especially, development opportunities change since you started?
A. Dramatically. Actually, most of the projects that I started with on my own were outside of South Florida. So our company did the [Courtyard by Marriott] project over by Fort Lauderdale airport. Then we went to Northern Virginia, D.C., Arizona, New York. Then I came back. ...
It’s crazy, I’ve been through three cycles and we’ve been in business for 12 years. So we came in and I was able to grow my business quite aggressively because the capital markets were extremely active and didn’t really limit my ability as a new developer or as a neophyte in the market from procuring financing. And then my legal background saved me in a sense that I was conservatively leveraged on all these deals so we were able to go through the downturn without ever missing a beat. And we actually were able to capitalize on a couple of opportunities during the downturn. We picked up the [Courtyard by Marriott] hotel in Coconut Grove and we picked up a second one outside of Chicago in a suburban market. Basically that was an alternative strategy during the downturn because construction financing for new projects was nonexistent.
Over the last three and half years, we got back into the market from a construction and development perspective and either developed or are in the process of developing two hotels in New York and three down here, including [Residence Inn by Marriott in] Sunny Isles. [A fourth, the Springhill Suites by Marriott — Miami Airport East, opened about five year ago.]
Q. Have you found that the opportunities available to you are reduced because there’s a lot of competition?
A. Huge. Right now, I mean, in my mind, I’m not really pursuing any new opportunities down here. I think the market is at a level that’s unsustainable from a cost perspective for a new project. Between construction, the cost and acquisition of land — you’re basically competing with condo developers, and they can pay more than a hotel developer can.
I don’t feel that, for the product type that we are accustomed to developing, that it’s a sustainable model. We’re long-term holders, we don’t sell. So we have to be in at a price point that allows us to survive for a long period of time.
And inevitably in the hotel space, there’s ups and downs. The market basically moves in tandem with GDP. So right now ’15 is expected to be strong, ’16’s strong. Let’s see then what happens with a presidential election, oil prices, international travel. There’s so many variables that play into it.
Q. What are the hottest areas for developers now?
A. In South Florida, South Beach remains a crown jewel. There are barriers to entry, obviously, both naturally and imposed by local zoning regulations in terms of the preservation of the Art Deco District and historic buildings. Those aren’t going to change. What scares me is downtown, Brickell I think is getting overbuilt to levels that are not sustainable because you’re not able to drive rate in our business as aggressively on the west side of the [MacArthur] Causeway as you are here on the beach.
Q. Do you think there are pockets that are still kind of hidden gems, undiscovered?
A. I’m very curious to see what happens in Wynwood and Design District. From the retail perspective, restaurants, it’s not a hidden pocket. It’s unproven from the hotel side. Will Wynwood one day become SoHo? Or will it just remain sort of a weekend destination, but not necessarily the kind of place you want to sleep, spend the night? So those are questions that we continue to ask ourselves. And the thing with hotels is: Being a pioneer is extremely risky. You could hemorrhage money with a hotel. If you build it and they don’t come, you’re screwed.
We have a hotel by the medical district, it’s a Marriott Springhill Suites. It does relatively well, but from a rate perspective, it’s dramatically lower to the point where by today’s dollar, it’s an unsustainable business model. So that’s why I’m hesitant to develop something on the west side. Because there’s no differentiating point between what you’re paying for construction on Miami Beach and the west side of the causeway. But your rates are dramatically different.
Q. What’s in your sights moving forward?
A. We’ve got a full plate. We’re not publicly traded, we’re not institutionally backed. It’s all private equity. [We’re] patient, so we’ve got plenty on our plate and if we develop and just continue to hold and operate and manage and extract value out of these assets, we’re fine waiting for the next opportunity. But we’re not going to chase an opportunity just to be active.
Q. What advantages do you think being a longtime local developer give you here?
A. I’ve seen it. When I go into markets like D.C. or Arizona, there’s just knowledge that you’re trying to gain from experts and locals that is still going to be second- or third-hand. Whereas here, I’ve lived it. I know where my wife and I want to go for dinner on a Saturday night that’s edgy versus more established and exciting, where we want friends of ours that are visiting to be staying. I don’t need a feasibility study to tell me how an opportunity is going to perform down here.
Q. So you’ve got these two hotels getting ready to open right around the same time. Why did you want to do those two things so close to each other, and how much sleep are you getting?
A. Not a lot of sleep, but I feel that the window of opportunity to develop the product type that I’m accustomed to developing, that three-and-a-half to four-star product, was closing. So we decided to dive in with both feet and assembled two fantastic teams and actually bolstered our team in house.
Q. I don’t think there’s a Hyatt in Miami Beach, right? And AC by Marriott?
A. First Hyatt in Miami Beach and the first ground-up AC by Marriott in the United States. So they’re pioneering.
Q. And how did you land those deals?
A. This is all I do, so I knew that Hyatt’s one of the leading brands in the world. Not having a presence in one of the most dynamic destinations screamed opportunity to me. It’s actually my first non-Marriott branded hotel, so when we presented them with the opportunity, they were extremely excited combined with our track record for executing developments. And I think it’ll play extremely well with the market, with the surrounding area. The Loews, it really complements the hotel product within that 16th and 17th and Collins corridor, which really is the most established hotel corridor in Miami Beach.
A. As far as the AC’s concerned, I’ve had a relationship with Marriott for 12 years. My family, we’re Hispanic, so it’s a brand that originated in Spain. And Marriott sort of involved me with its acquisition of the brand at a very, very early stage because I am bilingual, I’m a great ambassador from the developer side for the product. And the product obviously doesn’t play batter in any market than Miami because of the Latin and European influence.
Q. You’re right on deadline with both of them — how hard is that to do here?
A. Very. Especially now with so many construction projects on the condo side going on. The condo developers are extremely anxious to get completed and delivered. Nobody wants to get caught without a chair when the music stops. ... They’re heavily incentivizing subcontractors and their contractors to finish on time. So there’s a tremendous strain on resources. For me, I exhaled once the windows were on our buildings, frankly speaking.
Q. You mentioned knowing where you want your friends to stay and where you and your wife want to have dinner, so I’m curious: What’s the go-to dinner place these days?
A. The Edition: Matador Room and the Market. The Edition, in my opinion, from a five-star perspective, hit it out of the park. I don’t think anybody touches them now in the market.
One of the world’s largest hospitality companies, Starwood Hotels & Resorts Worldwide, might soon be the object of the largest-ever takeover of a U.S. company by a Chinese firm.The Chinese government is in discussion with three companies – Shanghai Jin Jiang International Hotels; HNA, parent of Hainan Airlines; and China Investment Corp., a sovereign wealth fund – one of which will bid on the massive hotel chain.
The government plans to choose just one company to avoid a possible bidding war for Starwood, which owns over 1,200 properties worldwide and manages brands such Westin, W Hotels and St. Regis, unnamed sources told the Wall Street Journal.
It’s not yet clear what the bidders are willing to pay, but the amount is likely to exceed Starwood’s start-of-Tuesday valuation of $12 billion, the Journal reported.
The hotel firm’s stock price jumped 9.1 percent Tuesday to 74.81 on the news, its highest level since 2009. Starwood in April said it was exploring various options that included a sale or merger, largely as a reaction to having lagged behind competitors like Hilton and Marriott. Its longtime CEO, Frits van Paasschen, resigned in February and Starwood has been selling off hotel properties this year.
A potential deal would be the latest in a string of major hotel pickups by Chinese firms. Last year, the insurance giant Anbang bought the Waldorf-Astoria at 301 Park Avenue in New York’s Midtown for nearly $2 billion. And in February, Sunshine Insurance Group, bought the Baccarat Hotel at 20 West 53rd Street, then a Starwood property, paying $230 million.
“Chinese investors have been pretty aggressive in the hotel market over the last year or so,” said Lukas Hartwich, an analyst at Green Street Advisors LLC, told Bloomberg. “Starwood has some pretty powerful brands. It’s an attractive platform, especially if you don’t already own a platform with that kind of cachet.”
All three firms involved in a possible bid for Starwood are state-controlled or partly owned by the Chinese government.