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Wednesday, August 18, 2010

Royal Palm Hotel auctioned for $126M


The Royal Palm, a Miami Beach hotel located at 1545 Collins Avenue, was bought for $126.1 million by Sunstone Hotel Investors at a Miami foreclosure auction on Monday. The company, based in California, now owns 31 hotels with 11,722 rooms, including the 409 rooms at the Royal Palm. The Royal Palm was the first Miami Beach hotel to be owned by an African American almost 20 years ago. Developer Guy Mitchell lost it now to Miami foreclosure.

Last April Wachovia Bank, who represents a commercial mortgage-backed securities fund, won a $142.7 million Miami foreclosure judgment against the hotel. That amount was based on the $108.4 million mortgage, plus interest and fees. At the auction, Sunstone outbid the lender’s amount of $94 million. Sunstone said in a news release that the cost of the purchase was closer to $117 million because it purchased a portion of the debt prior to the auction. According to analysts’ data,this was higher than the Miami Beach hotel’s value of $83.2 million last appraised in January. It was also reported that the Royal Palm’s occupancy rate was 55 percent in May, with an ADR of $158.

President and CEO of the Greater Miami Convention & Visitors Bureau, Bill Talbert, said the hotel was an iconic part of Miami Beach. He also added that if the Royal Palm gets upgraded and with the 800 rooms next door at the Loews Miami Beach Hotel, they should have an easier time booking large groups. “It’s a good investment,” he said. “Obviously, though, tens of millions of dollars need to be spent to bring the hotel back to where it needs to be.” Talbert says it’s the start of a new chapter and welcomes the sale of the historical property.

The Royal Palm prime location is just two blocks from Lincoln Road Mall and only four blocks from the Miami Beach Convention Center. Sunstone plans to renovate includes replacing furniture, fixtures and equipment that would take two years to finish. Sunstone, whose current holdings include the renovated Royal Palm and Shorecrest hotels, is looking for a management company for the property.

The Royal Palm Crowne Plaza opened successfully in 2002 even after Miami’s snub of Nelson Mandela triggered a three-year boycott. R. Donahue Peebles developed the hotel in South Beach and then sold it for $84 million.  Peebles’ sale of the Royal Palm allowed him to develop the Bath Club condominium and the Lincoln office building in Miami Beach.

 




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