Starwood-led consortium buys Miami Beach hotel

A consortium led by Starwood Capital Group has purchased a mixed-used property in Miami Beach for nearly $324 million. The consortium intends to spend $100 million to remodel the asset as a luxury tourist attraction and high-end multifamily property.

According to a statement released by the consortium, Starwood, the LeFrak Organization and Invesco Real Estate jointly acquired the South Beach property, which includes a hotel formerly known as the Gansevoort. The asset was sold by entities controlled by Credit Suisse, which had acquired it through foreclosure in 2010. Although terms of the transaction were not disclosed by the participants, data provider Real Capital Analytics lists the sale price as $323.8 million.

The property consists of 334 hotel rooms, 255 condominium units and 90,000 square feet of retail space. It also includes a 26,000-square-foot rooftop pool and lounge with sweeping ocean views, a 32,000-square-foot elevated pool plaza and restaurant and a 48,000-square-foot private beach. The asset, located on 2399 Collins Avenue, occupies the entire block between 23rd and 24th streets.

The consortium is planning to invest more than $100 million to refurbish and reposition the asset as a luxury hotel and condominium property. The hotel will be renamed The Perry South Beach until it is re-launched with a new brand in late 2013 after an extensive renovation. The luxury residential condominiums also will be improved, and the consortium anticipates them to be offered for sale later this year. The repositioning also will include several new local and national stores and restaurants in the retail corridor along Collins Avenue.

Invesco participated in the transaction through its Invesco Mortgage Recovery Fund. Starwood also participated in the deal on behalf of one of its commingled real estate funds, the identity of which could not be determined. 

Barry Sternlicht, chairman and chief executive officer of Starwood Capital Group, said in a statement: “This is an incredibly exciting opportunity to create a premier luxury hotel and residences at a time when global interest in the Miami marketplace is close to surpassing its all-time high.” 

Richard LeFrak, chairman and CEO of the LeFrak Organization, added: “This investment represents both a strategic move into the vibrant Miami market, as well as an expansion of our company's investments in the hospitality sector. We, in partnership with Invesco, are excited to combine our expertise with that of Starwood to renovate and reposition this property.” 

Starwood, LeFrak and Invesco also jointly participated in ST Residential, which acquired the loans and real estate-owned assets formally held by the failed Corus Bank, including more than 2,000 condominium units in Miami. The recent pace of condo sales in Miami encouraged members of the consortium to pursue further investments there.

News of this acquisition comes immediately on the heels of the announcement that Starwood closed on the acquisition of a commercial loan portfolio with a total face value of $312 million from an unnamed southwestern US regional bank. In addition, the Greenwich, Connecticut-based firm held a first close last month on its ninth global real estate fund, raising $1.2 billion in equity for Starwood Distressed Opportunity Fund IX in just four months.