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N MIAMI CONDO NEWS — All About Condo Living in the Magic City — Edited by Heinz Dinter, PhD |
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Holiday Isle plans take an extended vacation (2007-04-10) A weak real estate market may prove a boon to rum rummers in Islamorada. The owners of Holiday Isle announced Monday they were scrapping plans to finance a new luxury resort there with condominium sales and will seek a traditional commercial loan to build the project instead. The decision complicates plans for upgrading the famously honky-tonk getaway, which claims to have invented the frozen rum concoction. And it reflects South Florida’s growing disillusionment with condo-hotels, where individuals own the rooms and share in the rental revenues. Starwood Hotels and Resorts last summer dropped plans to sell all 230 rooms of a planned St. Regis Bal Harbour as condo-hotel units. Instead, Starwood and its partner, Related Group, plan to sell off fewer than 40 units and will keep the rest as standard hotel rooms. Robert Falor, once South Florida’s most prolific condo-hotel converter, said he has dropped plans to convert South Beach’s Royal Palm, Breakwater and Edison hotels in the face of a slow real estate market that helped push the Breakwater and Edison projects into bankruptcy. “The market for the condo-hotel has just gone sideways,” said Gregory Rumpel, executive vice president of the Jones Lang LaSalle hotel brokerage in Coral Gables. With the housing market slow — sales of Miami-Dade condominiums dropped 44 percent in February from a year ago — and room rates hitting records, Rumpel said hotels are looking more lucrative than condominiums for some real estate developers. The trend may reassure condo-hotel skeptics, who warned the conversions would displace tourists and conventioneers. But condo-hotel sales are still financing luxury hotels throughout the region, including two W resorts and two Donald Trump hotels. “I’m seeing that product being strengthened a little bit from all the bad press that condominiums are getting,” said Alicia Cervera, the broker overseeing condo-hotel sales at the South Beach W and the St. Regis Bal Harbour. Buyers are “thinking maybe now isn’t the time to buy a condominium. So maybe now is a time to buy a condo-hotel.” Adam Schlesinger, whose company paid $98 million for the 151-room Holiday Isle in February, said weak sales forced him to switch gears after only two months, despite a lavish launch that included glossy full-page newspaper supplements for the planned Ocanos resort. “It is simply a victim of a skeptical housing market,” Schlesinger said in a statement released Monday. He added condo-hotel sales could resume if the real estate picture improves. It’s not clear whether the setback will mean a longer life for Holiday Isle, home to a famous tiki bar and many boozy memories for South Floridians of a certain age. Schlesinger said dropping the condo-hotel plan has caused some delay, but that he still needs local approvals before scheduling a demolition date. He expects Holiday Isle to close next year at the earliest and possibly not until 2009. Still, without the condo-hotel windfall — prices for the planned 151 suites were listed between $1.2 million and $2.7 million at condohotelcenter.com — Schlesinger must upend his original financial strategy. His company, West Palm Beach’s Ceebraid-Signal, has already faced a cash crunch on the project, briefly putting an affiliate into bankruptcy protection when it couldn’t secure enough investment dollars to close on the sale. Rumpel, of Jones Lang LaSalle, said it would be difficult to turn a profit after paying $98 million for Holiday Isle — even at five-star rates. Add in demolition and construction costs, and Rumpel said Schlesinger will need more than hotel guests to stay afloat — including high-end weddings, slip rentals at the marina and luxury restaurants. “Basically everything that’s there now will have to be considered but at a considerably higher level,” Rumpel said. “The current clientele probably doesn’t want to spend any more than $5 a beer.” Source: www.MiamiHerald.com • Douglas Hanks, dhanks@miamiherald.com
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