Shared Ownership Services - Success Stories

Redevelopment Scenarios & Considerations for a Luxury Boutique Hotel

Background
Within the past ten years, Miami Beach has become one of the hottest hotel and condominium markets in the world. Significant investments have been made in old hotel and apartment buildings, converting once run down retirement homes into trendy and flashy boutique hotels. The continued increase in capital investment into the area, as well as the upward spike in real estate values, has presented more opportunities for established properties to create additional asset value through various vacation ownership product formats/offerings.

The Project & the HVS Assignment
This project involved an existing upscale beachfront hotel and three non-beachfront parcels all located within the highly desirable and high barrier to entry South Beach submarket of Miami Beach. The client and owner of the property wanted to examine both condo-hotel and fractional ownership redevelopment options for the property on a building by building basis in order to understand the market potential for each use at each physical asset, and the potential value related thereto. These later business conclusions were to serve as the framework from which the client would decide to either undertake a redevelopment process, or negotiate the sale of the overall asset (jointly or on an individual building basis) with the knowledge of its true development potential and value.

On behalf of the client, HVS International Timeshare Division (headquartered in Miami) spearheaded a development consulting team of professionals that included the Miami office for HVS International's Hotel Consulting and Valuation Services local attorneys knowledgeable about construction codes and ordinances, as well as the nuances of the regulations governing the South Beach Historic Preservation District of Miami Beach, and architects that were familiar with the renovation of historic buildings that must comply with the strict Historic Preservation District Regulations. Senior professionals from the HVS International Timeshare Division coordinated the efforts and feedback from the development consulting team members and used this vital information to narrow the true redevelopment possibilities.

The HVS International team analyzed the highest and best use of the project as a whole, as well as the use of each of the parcels (i.e. the beachfront hotel and the non-beach front parcels). The redevelopment scenarios ranged from incorporating the overall existing project into one integrated master plan or breaking the assets into four distinct and different properties. The various uses analyzed and considered included different transient hotel quality tiers, selling a portion of the asset in a condo hotel regime, and selling the beachfront building in a fractional ownership structure.

Conclusions
The integration of multi-disciplinary abilities and cross-industry expertise within one office location has allowed the HVS International Timeshare Division, working in conjunction with the Miami office of HVS International to perform a significant number of mixed use hotel and vacation ownership consulting and valuation assignments for developers, owners, and lenders, not only in Miami Beach, but also throughout the country and many international locations as well.

After diligent research, we provided our client with the financial results that each scenario would have on the group's investment. The findings of the HVS International Timeshare Division helped the owners determine the course of action that was best for their overall goals and objectives.