Back again: Michael Shvo, partners to buy oceanfront Richmond Hotel in South Beach

The same partnership paid $103M for the Raleigh in February

Patricia McBride Herbert, Allan Herbert, and Michael Shvo with 1757 Collins Avenue

Patricia McBride Herbert, Allan Herbert, and Michael Shvo with 1757 Collins Avenue

Developer Michael Shvo and his partners are bulking up in South Beach. The partnership is under contract to buy the oceanfront Richmond Hotel, marking the group’s second purchase along Collins Avenue this year, sources told The Real Deal.

In February, Shvo’s New York-based SHVO, Bilgili Holdings and Deutsche Finance America paid Tommy Hilfiger and the Dogus Group $103 million for the 83-room Raleigh Hotel. The property is next door to the Richmond Hotel.

The Richmond, at 1757 Collins Avenue, has 92 rooms in a four-story, nearly 52,000-square-foot building. It was built in 1941 and sits on a 32,670-square-foot lot, records show.

The sellers are Patti and Allan Herbert, who represent the third generation of the family that has owned the hotel since its inception, according to the Richmond’s website. The Herberts are major benefactors to the Frost Science Museum and the University of Miami, where they donated $8 million to name the Patti and Allan Herbert Wellness Center.

No sale price for the Richmond has been disclosed. The Raleigh, which sits on a larger, 60,541-square-foot lot, sold at $1.24 million a key. It had been closed since Hurricane Irma hit South Florida in September 2017.

John Wijtenburg, director of Colliers International South Florida’s hotel group, estimates that the Richmond could sell for about $600,000 a key or $55 million. “It needs a good bit of work to come up to the standards of competitive properties in the area, but it’s a well known asset in that market,” he said.

The Raleigh acquisition marked the first in South Florida for Shvo, chairman and founder of SHVO, and his partner, Serdar Bilgili, the owner of the Istanbul-based real estate private equity firm BLG Capital.

In New York, Shvo’s projects include the Getty building in West Chelsea. The same partnership that acquired the Raleigh and is now acquiring the Richmond also paid $135 million for the office portion of 685 Fifth Avenue in 2018. The group recently won approval to convert that space to residential condos.

Other oceanfront hotels near the Raleigh and Richmond that have sold in recent years include the Sagamore Hotel, which Fort Lauderdale-based InSite Group and New York-based EL Group bought for $63 million in 2016; and the Shore Club Hotel, which New York-based HFZ Capital purchased for $175.3 million in 2014.

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National Cheat Sheet: Amazon dumps NYC, Google plans $13B real estate investment, Sears survives… & more

Clockwise from top left: Amazon cancels HQ2 plans for Long Island City, Google plans multibillion-dollar, cross-country real estate investment, Sears plans to downsize, focus on tools and appliances post-bankruptcy and Simon Property Group teams up with a cannabis oil company to open 108 shops.

Amid opposition, Amazon says ‘adios’ to LIC site for HQ2
So long, Big Apple. Amazon has scrapped its plans to build a new campus in Long Island City, Queens — a decision it attributed to political opposition. New York lawmakers, including Sen. Michael Gianaris and Councilman Jimmy Van Bramer, both of Queens, opposed the $3 billion incentive package the technology giant had been set to receive. Critics also took issue with the Seattle-based company’s business practices and the possibility of displacement, among other concerns. While some celebrated the decision, which came a week after reports surfaced of Amazon having second thoughts, others excoriated those they blamed for forcing a coveted tenant out of town. Gov. Andrew Cuomo, the Real Estate Board of New York and others lamented Amazon’s about face, with Cuomo blaming politicians with “narrow political interests” for the reversal. [TRD]

Google plans $13B in cross-country real estate investment
Despite Amazon’s ongoing HQ2 drama, fellow technology industry titan Google is planning to invest more than $13 billion in data centers and offices across the country, CEO Sundar Pichai wrote in a blog post. The investment will include expansions in 14 states and is expected to create more than 10,000 new construction jobs, Pichai said. Google is slated to have locations in two dozen states by the end of 2019. The company, a unit of the Alphabet conglomerate, spent approximately $2.5 billion in 2018 opening or expanding data centers in Alabama, Oklahoma, Oregon, Tennessee and Virginia. Google, which paid $2.5 billion in cash last year to acquire the Chelsea Market building in Manhattan, is also planning to invest $1 billion in a new campus in the city. [TRD]

Sears to downsize, focus on tools and appliances post-bankruptcy
The storied retailer plans to sell off or downsize some of its remaining 425 stores after escaping liquidation in bankruptcy court, the Wall Street Journal reported. Sears, which filed for bankruptcy in October, will stop selling clothing and focus instead on tools and appliances — one of the areas that generates the most revenue for the company. Sears also plans to open some smaller stores, according to the outlet. Chairman Edward Lampert said he felt the company would “still have enough of a critical mass,” despite the changes. His hedge fund ESL Investments successfully bid $5.2 billion for Sears’ assets in January. [TRD]

Simon Property Group, cannabis oil company to open 108 shops
Riding high from a record fourth quarter, mall industry giant Simon Property Group is now planning to open 108 shops that sell cannabis extract cannabidiol-infused products in its malls, CNBC reported. The mall owner is teaming up with Green Growth Brands to open the shops, the first of which will open in March, the two companies said. “The GGB shopping experience is exactly the type of innovation our customers want and expect from us,” said a statement from John Rulli, president of Simon Malls. Long Island’s Roosevelt Field Mall Mall and Houston’s Galleria are among the shopping centers that will host the new shops after the first opens its doors at the Castleton Square Mall in Indianapolis next month. [TRD]

JLL CEO cites co-working, tech investments for revenue boost
Focusing on co-working is paying off for Chicago-based JLL. The real estate services giant reported revenue of $4.9 billion in the fourth quarter of last year — 13 percent higher than the same quarter in 2017. CEO Christian Ulbrich attributed the jump to co-working and real estate technology investments. “I can say for us that the flex-based [coworking] companies… have become an important client base for us, and so quite a significant proportion of that additional growth is coming from them,” Ulbrich said on an earnings call. JLL is currently valued at $6.67 billion. [TRD]

MAJOR MARKET HIGHLIGHTS

HUD administrator moves into NYC public housing complex
The regional administrator for the U.S. Department of Housing and Urban Development is temporarily moving into a public housing complex in New York City. Lynne Patton, a former event planner, plans to live at the Patterson Houses in the Bronx to learn more about quality-of-life issues that New York City Housing Authority residents have been facing, from moldy walls to leaky pipes. HUD recently appointed a federal monitor to oversee the agency as it carries out improvements. “The goal of this move-in is to make NYCHA very aware of what is happening,” Patton said. “To make the President of the United States very aware of what is happening here in his own hometown.” [TRD]

Chicago sees lowest housing supply level since at least 2007
The Windy City had fewer homes on the market on Feb. 2 than it has since at least 2007, Crain’s reported, citing data from the Chicago Association of Realtors. According to the data, 3,041 homes were up for sale that day — a 14 percent decline from the same date the previous year. The numbers most likely came as no surprise for experts who have been attributing increased home prices and decreased home sales in Chicago to low inventory. Property tax hikes, underwater mortgages and overbuilding are among the factors that have contributed to the inventory declines, the outlet reported. [TRD]

Tommy Hilfiger, partners sell Miami Beach hotel for $103M
An Art Deco-hotel in Miami Beach owned by Tommy Hilfiger and the Dogus Group has sold for $103 million. A partnership formed by New York-based developer Michael Shvo, the Bilgili Group and Deutsche Finance Group bought the 83-room Raleigh Hotel, which closed its doors after Hurricane Irma hit in 2017. Hilfiger called the deal “an offer we just could not refuse.” Shvo, meanwhile, said he planned to “[bring] about [the hotel’s] next renaissance” and called it “a nostalgic icon and a symbol of twenty-first century style and luxury.” Hilfiger’s group shelled out $67.5 million for the property back in 2014. [TRD]

Tyra Banks’ ‘Modelland’ amusement park set for Santa Monica mall
“America’s Next Top Model” creator Tyra Banks is bringing a model-themed amusement park to an outdoor mall in Santa Monica. The 21,000-square-foot park known as Modelland is slated to open at Santa Monica Place some point this year, WWD reported. The permanent destination is expected to offer shopping, entertainment and unspecified interactive experiences. Banks told WWD that Modelland, which takes its name from a book that she wrote, has been in the works for a decade. A children’s museum will also be opening at the mall this year. [TRD]

Subterranean Las Vegas home built in the 1970s seeks $18M
An underground mansion has hit the market for $18 million in Las Vegas. The 15,000-square-foot home, built in the 1970s by former Avon executive and underground living enthusiast Girard Henderson, has a guest house, a pool and a front yard with trees — all of which are below the surface. Henderson’s wife built an additional above-ground home at the property in 1983, after Henderson passed away. Listing agent Stephan LaForge of Berkshire Hathaway said there has been “a lot of interest in the sense that people want to look at it,” Time reported. “It’s like an attraction, like going to Disneyland,” he said. [TRD]

“Birthplace of Amazon” in Seattle hits market for $1.5M
Jeff Bezos may have turned his back on New York City, but the home where Amazon was formed has now been listed by its current owners for $1.5 million, the Seattle Times reported. Bezos was renting the 1,500-square-foot, three-bedroom home in the Seattle suburb of Bellevue when he launched Amazon back in 1994. The home’s listing agent, Pat Sullivan, is marketing it as the “birthplace of Amazon.” The house previously sold for $620,000 in 2009, the outlet reported. Bezos currently owns a $76 million waterfront estate in Medina, Washington, and he spent $13 million in 2017 on a Beverly Hills mansion. [TRD]

Tommy Hilfiger group sells Raleigh Hotel in South Beach to Michael Shvo and partners for $103M

Tommy Hilfiger group sells Raleigh Hotel in South Beach to Michael Shvo and partners for $103M

83-key Art Deco hotel sold for $1.24M a room, likely a record in Miami area

Tommy Hilfiger, Michael Shvo and the Raleigh Hotel

Tommy Hilfiger and Dogus Group sold the Raleigh Hotel in Miami Beach to a partnership led by New York developer Michael Shvo for $103 million.

The deal breaks down to about $1.24 million a key, one of the most expensive hotel sales on a per-room basis in Miami-Dade County.

Shvo, Bilgili Group and Deutsche Finance Group acquired the 83-room Art Deco hotel at 1775 Collins Avenue, according to a release.

The Raleigh had been closed since Hurricane Irma hit South Florida in September 2017. Hilfiger said in a statement that despite working to restore and reopen the hotel, “this was an offer we just could not refuse.” The Wall Street Journal first reported the sale.

Hilfiger’s group paid $67.5 million for the property in 2014 and planned to turn the hotel, built in the 1940s, into a private club. But the property was rumored to be for sale following Hurricane Irma a year-and-a-half ago.

Shvo, chairman and founder of SHVO, said his group is committed to “bringing about its next renaissance,” calling the hotel “a nostalgic icon and a symbol of twenty-first century style and luxury.”

His business partner in the deal, Serdar Bilgili, is the owner of the Istanbul-based real estate private equity firm BLG Capital.

The Raleigh acquisition marks the first for Shvo in South Florida. In New York, his projects include the Getty building in West Chelsea. The same partnership that acquired the Raleigh also paid $135 million for the office portion of 685 Fifth Avenue in 2018.

In Miami, the deal could mark a new per-room record for hotel trades. Billionaire Michael Dell was set to buy 1 Hotel South Beach for about $500 million, or $1.2 million per key, but that deal has not yet closed.

Real estate’s top names to speak at TRD’s New York showcase

Clockwise from top left: William Macklowe, Rodrigo Nino, Arthur Zeckendorf, Bruce Eichner, Vishaan Chakrabarti and Robert Reffkin
The Real Deal is gearing up for our biggest New York Real Estate Showcase and Forum ever, with more than 3,500 investors, buyers, brokers, financiers and developers gathering for an action-packed day of networking, dealmaking and previewing some of the hottest developments in New York City and Miami.
Arthur Zeckendorf (Zeckendorf Development), Michael Shvo (Shvo), William Macklowe (William Macklowe Company), Bruce Eichner (Continuum Company), Robert Reffkin (Compass), Raphael De Niro (Douglas Elliman), Bob Knakal (Cushman & Wakefield), Rodrigo Nino (Prodigy Network), Artie Minson (WeWork), Robert Futterman (RFK) and Vishaan Chakrabarti (PAU) are among the top real estate names who will participate on our lineup of panels.
The discussions will address some of the industry’s biggest issues, and provide valuable insight into the city’s residential and commercial markets.
Click here to buy tickets to our May 12 event, which will be hosted at the Metropolitan Pavilion in Chelsea. To become a sponsor, call (212) 505-6271 or send an email to forum@therealdeal.com. For editorial inquiries, contact Heather Grossmann at hg@therealdeal.com.

Source: The Real Deal Miami