Holland & Knight Pushes Work on $120M Miami Beach Hotel Deal in Time for Super Bowl
The attorneys represented a member of the joint venture that purhcased the Shelborne South Beach hotel-condominium.
February 18, 2020 at 03:13 PM
4 minute read
A Holland & Knight team completed its end of a $120 million Miami Beach hotel acquisition in time for Super Bowl weekend, condensing a typical six-month deal into five weeks.
The attorneys represented a member in the three-way joint venture that bought the Shelborne South Beach hotel-condominium from an affiliate of W.P. Carey Inc., a New York-based real estate investment trust. The purchase closed Jan. 31, the Friday before Miami hosted the Super Bowl and its tourist infusion.
Holland & Knight Miami partners Steven Lear, who is national joint venture practice leader, and Missy Turra, who heads the Southeast real estate practice, represented King Street Real Estate GP LLC, the real estate investment arm of New York-based hedge fund manager King Street Capital Management LP. King Street Capital is a $20 billion global investment manager.
Holland & Knight partners Stephen Sandiford and Tracy Slavens in Miami and consulting counsel Stacy Watson May in Jacksonville also participated.
The other two members of the JV are Toronto-based real estate developer and owner Westdale Properties and hospitality firm Cedar Capital Partners with offices in New York and London.
The 1940s-built Art Deco-style Shelborne comprises 10-story and 17-story buildings at 1801 Collins Ave.
The Holland team wasn't directly involved with purchase negotiations as Westdale and its team took the lead. The attorneys represented King Street in the JV and reviewed all aspects of the purchase on its behalf.
"The transaction was very fast, about five weeks, which is very aggressive for a transaction of this complex and sophisticated nature with multiple parties," Lear said. "There was a big push to get this closed so that our client and its partners would own the hotel prior to Super Bowl weekend. We met that deadline."
Still, it was no easy feat on a complicated, multi-faceted deal. Some of the complexities stemmed from the property's hotel-condo structure and the JV involving three instead of the more typical two partners. The JV members also had more geographic spread than usual.
This "resulted in international tax issues and planning and structuring in order to make sure that everyone's needs were met," Lear said.
Turra led the real estate due diligence aspect of the deal. The property is registered with Miami-Dade County as individually owned condo units. Of 275 units, 221 are run as a hotel, and the rest are pure condos. Aside from the hotel itself, the JV bought 30 condo units for an additional $20 million.
The due diligence included property title and survey analyses as well as a deep dive into the land use, zoning, permitting and entitlement.
The condo nature of the property meant the Florida Condominium Act had to be considered in the deal, said Turra, who works out of the Jacksonville and Miami offices.
"Whenever you have condominium involved, you have this statutory creature that says, 'Hey, regardless of what the two parties may desire in absolute terms, you still have to fall back and make sure you follow the formalities of the Condominium Act,' " Turra said. " It typically creates a little more structure and a little more extra steps to the transaction, but I think here everyone was very committed to working toward the same goal and understanding that when you have a condo, you just have to kind of live with the few extra steps. But at the end of the day everyone was working with the same goal, so we were able to work through it."
This kind of work typically takes form six months to a year, Turra added.
Lear said the JV partners had to agree on the deal structure, terms of the various partnerships and the hotel management agreement, among other aspects.
Miami-based Menin Hospitality, led by managing principal Jared Galbut, will continue to manage the Shelborne.
The purchase came on the heels of the completion of renovations, including a $500,000 revamp of its 4,388-square-foot Grand El Dorado Ballroom that incorporated Art Deco details.
The Drawing Room Bar & Lounge has new decor and furniture, and other renovations were done on public spaces and guestrooms. The hotel also soon will reintroduce its GUYandGIRL Spa.
Although King Street got involved with the purchase five weeks before the deal closed, Westdale already had embarked on the transaction prior to that.
The main hotel transaction breaks down to $542,986 per key.
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