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DAILY BUSINESS REVIEW october 28, 2015

$2 Billion in South Florida Hotels in Play This Year

by Samantha Josephsjoseph@alm.com

It’s a good time to be a South Florida hotel broker.

Take Christian Charre and Robert Taylor, two CBRE Inc. exec-utives marketing the Conrad Miami

after domestic and international buyers gobbled up $2 billion worth of South Florida offerings in the first 10 months of the year.

“There’s a lot of belief that the capital flowing into Miami has dried up,” commercial real estate attor-ney Jay Steinman, a shareholder at

Carlton Fields Jorden Burt in Miami, told the Daily Business Review.

Anticipated hikes in U.S. interest rates, the strengthening of the dollar, rising prices across South Florida and economic declines in Latin American combined to prompted analysts to fear a slowdown.

Special RepoRt : Biggest Real estate Deals

a.M. Holt

The top Miami-Dade hotel deal was the Ritz-Carlton Key Biscayne selling for just under $493 million.

“Some think this market is too red hot and prices don’t make sense,” Steinman said. “I’ve seen some of that, but I haven’t seen as much as the doomsayers are pre-dicting. We’re still seeing invest-ments here.”

That’s especially evident in the hospitality sector, where escalat-ing booking rates, high occupancy, more visitors and interest from luxury brands fuel investor interest in the region’s hotels.

So far this year, five Miami-Dade County hotels traded in the $100 million to $400 million range, and three more were dealt for well north of $50 million. In a deal that topped them all, the Ritz-Carlton Key Biscayne fetched just under $493 million. The smallest of the top 10 deals brought in nearly $52 million when the Courtyard Miami Airport South sold.

Two large Fort Lauderdale deals fell just outside that range,

with the Renaissance Hotel selling for $48 million to Atlanta-based Noble Investment Group and Invesco selling the Ritz-Carlton to Carey Watermark Investors for $45 million in Broward County’s largest hotel deals.

Meanwhile, the InterContinental Miami generated $371 million, James Royal Palm $278 mil-lion, Miami Beach Edition $230 million and SLS South Beach $125 million.

“International investors were looking at prominent markets, and Miami wasn’t making the cut,” said Charre, a CBRE Hotels senior vice president focused on owners and investors in Florida, the Caribbean and Latin America. “This is a big change, and it’s created a frenzy of investments.”

6,000 New RoomSEconomic think tanks and mar-

keting groups heralded the change that fueled developers’ plans for more than 6,000 new hotel rooms in Miami-Dade over the next two years.

It’s meant good news for the re-gion as the county’s leisure and hos-pitality sector led job growth among all industries over the last year, ac-cording to Florida’s Department of Economic Opportunity. The county added 7,500 tourism jobs through July, a 5.9 percent increase from a year earlier, for a total of 134,800 positions.

July also marked the fourth consecutive month Miami-Dade’s hospitality sector job growth outpaced all other industries.

“The strength of the Miami brand continues to attract new travel

“It’s a gold mine down there.”

SuSan WeSt SaleS aSSociate arcadia realty

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a.M. HoltCBRE executives Christian Charre and Robert Taylor are marketing the Conrad Miami at what some say is a perfect time, with investors buying $2 billion worth of South Florida real estate in the first 10 months of the year.

and tourism infrastructure, such as new hotels and restaurants,” said William Talbert III, president and CEO of the Greater Miami Convention & Visitors Bureau.

Further north, experts say prime beach hotels in Fort Lauderdale experience year-round occupancy around 80 percent, fueling mount-ing rates.

“It’s been very robust, and the hoteliers are loving it,” said Craig Studnicky, principal at International Sales Group LLC, a marketing firm retained by hoteliers and condo de-velopers.

Hundreds of millions of dol-lars in federal and state aid to ex-pand Interstate 95 and the Fort Lauderdale-Hollywood International Airport brought new infrastructure, highway refurbishments, seaport expansion and thousands of visitors.

“The sector’s unbelievably strong,” Studnicky said. “What it tells you is there is a shortage of hotels rooms.”

Private dollars could expand the region’s hospitality sector, es-pecially when Florida East Coast Railway starts work on its high-speed rail connecting South Florida to Orlando’s tourism hub. FEC’s proposed line would create transit-oriented development at stations in Miami, Fort Lauderdale and West Palm Beach. It would also shuttle visitors and commuters between the two regions while creating more than 1,400 rail construction jobs and $653 million in federal, state and local government tax revenue through 2021.

‘it’S a gold miNe’ The tourism sector’s performance

and prospective growth drove deals

at both ends of the spectrum, creat-ing demand for luxury resorts with eight- and nine-figure price tags as well as small properties in quaint beachside towns.

“I’m getting calls from buyers all over the world for either Miami or Fort Lauderdale,” Premier Hotel Realty’s Rick Tobin said. “Everyone who calls wants the beach. Almost all sales have been to buyers from out of the area, and most deals do not involve bank financing.”

“Some think this market is too red hot and prices don’t make sense.”

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The Ritz-Carlton Key Biscayne was one of the three Miami-Dade hotel deals topping $100 million.

In September, Tobin closed a $1.9 million cash sale to a Canadian investor who acquired Castle by the Sea, a 19-room motel and longtime fixture on Highway A1A north of Commercial Boulevard and two blocks from the beach in Lauderdale-by-the-Sea. The prop-erty once belonged to a French investor.

When Tobin listed the motel, site metrics from Loopnet, the online commercial real estate marketplace, indicated about 17,000 users were searching for similar properties. Within months, that number climbed to 48,000, which might explain the flurry of foreign investment over the last two years in Lauderdale-by-the-Sea, a 1.5-square-mile town on a barrier island.

“Investors worldwide love the values, amenities, upside potential, political and economic stabil-ity, climate and lifestyle of South Florida’s beachfront areas,” Tobin said. “Often, we locals take living in paradise for granted.

A Ukrainian investor behind Florida Development Group pur-chased six motels on El Mar Drive in Lauderdale-by-the-Sea over the last two years, including one deal led by Tobin and Boca Raton at-torney Tim Shane. The company paid $7.3 million for the 27-room Captain Quarters in 2013 be-fore buying several neighboring properties.

Danish buyer Holm Property Inc. paid $1.7 million in 2014 for Tropicaire Resort, a 13-room motel on Bougainvilla Drive.

Meanwhile, Swiss buyers scooped up the Great Escape motel, Mexican investors bought Paradise by the Sea, Canadians purchased the Sea Spray Inn, and Brazilians acquired and renovated The Tides.

“It’s a gold mine down there,” said broker Susan West, a sales as-sociate at Arcadia Realty in Fort Lauderdale. “It just draws people. Occupancy during the season is constantly full.”

West represented Mexican time-share operator EGOA Realty LLC, which paid $3.38 million to add the 36-room Paradise by the Sea mo-tel to its portfolio, then provided a capital outlay to gut and refurbish the property.

“I book a lot of hotels in Lauderdale-by-the-Sea,” West said. “The cap rate is there. Most inves-tors want 10 percent, and as far as they’re concerned they know they’re going to get their invest-ment back.”

‘SpectRum of BuyeRS’That’s likely good news for

the CBRE brokers marketing the Conrad.

In the three months since Charre, Taylor and colleagues Natalie Castillo and Paul Weimer brought the luxury property to market with no asking price, they’ve collected 12 offers for a sale likely to gener-ate north of $100 million and rank among the year’s largest.

They expect to whittle the list of prospective buyers by the end of October to close by January.

“We’re generating tremendous interest,” said Taylor, a CBRE Hotels senior vice president specializing in large single-asset transactions and regional portfolios. “There’s a spectrum of buyers looking at this market.”

Samantha Joseph can be reached at 954-468-2614.

Reprinted with permission from the 10/28/15 edition of the DailY BUsiness ReVieW © 2015 alM Media Properties, llc. all rights reserved. Further duplication without permission is prohibited. contact: 877-257-3382 reprints@alm.com or visit www.almreprints.com. # 100-11-15-01

“I’m getting calls from buyers all over the world for either Miami or Fort Lauderdale.”

rick toBin Premier hotel realty

Mela

nie Bell