Credit Suisse Asset Management and Trinity Investments’ $835 million purchase of The Diplomat Beach Resort hotel in Hollywood, Florida made plenty of headlines when the deal was announced last Friday.
It was a high-profile transaction in a market suffering little activity since the pandemic and the ensuing inflation concerns that have gripped the global economy. The deal was also significant for each of the firms involved.
Beyond being the largest US hospitality transaction to have happened since before the pandemic, it is one of the largest Credit Suisse Asset Management has ever done in the country.
For Brookfield, the seller, it is the second sale of high-profile hospitality assets in the last year, after the Toronto-based manager sold its WoodSpring Suites portfolio to Blackstone and Starwood for $1.5 billion at the start of 2022.
Trinity’s involvement, meanwhile, represents its continued belief in the future prosperity of so-called ‘big box’ convention hotels, having acquired properties in Dallas and Indian Wells, California last year.
However, beyond those factors, the deal makes it no easier to draw hospitality market conclusions or even offer much in way of price visibility.
One hospitality sector expert told us: “It’s such a unique property. The size, the location, the scale.” Another reiterated the same, saying the property is one of the few convention center hotels with a direct beachfront in the country.
The deal’s capital structure is also rare. In a market where debt is difficult to originate, the Credit Suisse and Trinity consortium are assuming the existing loan obligations of the property. A $460 million CMBS first-lien mortgage has been in place since 2019, which means the debt is inheritable at more favorable rates than any new originations taking place in this high-rate environment.
While big in size, this transaction is, however, unlikely to buck a broader trend in hotel investments. According to global property services firm CBRE, Q4 hotel investment volume in the US fell 12.3 percent year-over-year to $11.9 billion. Single-asset sales, which this deal is, fared even worse last quarter, plummeting 32.2 percent year-over-year to $7.2 billion.
Looking at South Florida specifically, across property types the region experienced a 24.9 percent drop in investment activity. Specifically, hotel sales in the region dropped by more than 25 percent to $2.1 billion.
So the Diplomat Beach Resort changing hands is not the thematically relevant deal it could have appeared at first glance. It would be better regarded simply as a massive transaction that stands out because of its own array of factors.
If you do not receive this within five minutes, please try to sign in again. If the problem persists, please email: 
