Chesapeake Lodging Trust has closed on the acquisition of The Royal Palm located in Miami Beach, Florida for a purchase price of $278 million, or approximately $707,000 per key. Chesapeake entered into a new management agreement with HEI Hotels & Resorts to operate the hotel and a new franchise agreement with Starwood Hotels & Resorts and will be affiliated with Starwood’s new brand for independent hotels.
James L. Francis, Chesapeake Lodging Trust’s CEO, commented: “We have been looking for the right situation and are delighted to have found a high-quality, fully renovated asset in an outstanding location and with tremendous operational upside.”
The Royal Palm is located at Collins Avenue and 15th Street, in the heart of South Beach fronting the Atlantic Ocean. The iconic Art Deco property contains 393 guestrooms averaging approximately 426 square feet, including 164 suites and 141 rooms offering ocean views. The suites range from approximately 500 square feet to the 1,200 square feet two-bedroom apartment suites.
Byblos, The Royal Palm’s featured restaurant, is located on the first two floors of the hotel’s Shorecrest building. The Mediterranean cuisine concept is operated by INK Entertainment via a 10-year lease arrangement with the hotel. Byblos is currently under construction with a planned opening in April 2015.
From 1998 through 2002, The Royal Palm underwent a major redevelopment and reconstruction project to bring the resort up to modern building codes and standards, including the construction of the two 17-story towers, resulting in the nearly 400 rooms enjoyed today. Starting in 2010 and completing in late 2012, a comprehensive renovation with a cost of approximately $50 million was completed.
“The hotel is in excellent shape and conveys the contemporary feel of South Beach,” continued Mr. Francis. “We will execute upon our business plan that includes minor changes to the product offering, but we anticipate no disruption as we reposition the property.”
HEI Hotels and Resorts became the hotel’s new manager at closing of the acquisition. HEI currently manages approximately 1,200 rooms for Chesapeake and one of its restaurants at the W Chicago – Lakeshore.
Chesapeake has entered into an interim franchise agreement with Starwood, under its Luxury Collection brand. The Royal Palm will then migrate to Starwood’s new brand upon its roll out and will be the first in this new soft brand which is anticipated to occur within the next 60-90 days.