2000 – 2005
CHMW oversaw this asset and advised ownership through the investment cycle; from providing the initial due diligence that led to the property’s acquisition in 2000 and overseeing property operation, to planning and managing approximately $20 million in capital improvements, identifying the highest-and-best use of unused space for redevelopment. We advised on and executed the disposition strategy, which resulted in highly favorable return for our investor client.
Given the timing of acquisition and the events that soon followed the initial acquisition, including 9/11, Iraqi War and economic downturn, significant cost containment plans were developed and implemented to maintain a positive cash flow on this asset. At the same time, we identified significant capital improvements to reposition this historic 1950’s art deco asset. We worked with the operating team to develop a comprehensive property improvement plan that evaluated guestrooms, food and beverage outlets, spa, beach, cabanas, function space, pool area and an underutilized sports center, to model and evaluate the highest-and-best use and ultimately identify both capital projects and redevelopment opportunities. This plan was executed over the five-year ownership period, including a complete hotel renovation, restoring the Resort back to its original Art Deco grandeur, while upgrading guest rooms, meeting areas and recreational spaces. Given the severe and rapid market decline post 9/11 and the economic decline that followed, we pushed the timing of these capital projects to take advantage of the lower occupancy and minimize renovation impact to the operation. As a result, we completed the renovation and reintroduced the hotel in time to take advantage of market improvements, which showed signs of recovery in early 2004. We also began posturing for the eventual disposition of the Resort and worked closely with local attorneys, land planners and the Miami Beach Historical Society to identify permissible development parameters, including air rights and FAR, among others. We petitioned the City of Miami Beach to have certain rights for specific areas grandfathered, a process which required demonstrating that portions of the building were in fact not truly “historic” and therefore could be redeveloped.
Realized significant long-term capital appreciation through a combination of enhancing operational performance and exploring potential development rights.
Operational Asset Management
- Oversaw more than $20 million in capital improvements to enhance positioning and increase overall property value.
- Implemented a comprehensive capital improvement plan to reposition resort to penetrate higher rated transient market segment in South Beach.
- Identified opportunity for condominium development and obtained necessary approval rights to pass on to buyer, contributing significant upside to the sales price in excess of 25% of the value of the hotel.
- Upon sale, the purchaser embarked on and completed a $110 million repositioning, which incorporated most of the opportunities CHMW had identified.