The breakdown: Inside Virgin Hotels’ $330M vision for South Beach and how it vanished

In HFZ’s Shore Club, Richard Branson’s hotel division thought it had found the perfect spot for its Miami Beach flagship. That was in February
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In HFZ’s Shore Club, Richard Branson’s hotel division thought it had found the perfect spot for its Miami Beach flagship. That was in February

Virgin Hotels had been looking for the right redevelopment opportunity in South Beach for years and appeared to have found it a few months ago in HFZ Capital Group’s Shore Club. An offshoot of Richard Branson’s Virgin Group, Virgin Hotels created a proposal to purchase the 309-key beachfront hotel for $235 million, The Real Deal has learned. It put together a 46-page offering document likely aimed at potential investors. The booklet included detailed financials about the new hotel, along with renderings on how the property would be transformed, at a cost of around $100 million.

Miami-based Virgin Hotels, led by CEO Raul Leal, targeted closing on the property in the first quarter of this year, with construction to start in February 2021, according to the document, dated February 2020. The redesigned hotel at 1901 Collins Avenue in Miami Beach had an expected opening date of August 2022.

But discussions were sidelined and the timeline abandoned, as the coronavirus began to spread and eventually led to the statewide shutdown of nonessential businesses. A Virgin Hotels spokesperson this week sounded an optimistic note about the future, but with tourism only beginning to creep back and financing opportunities slim for hotel acquisitions, it is unclear whether negotiations will resume.

Hotels were ordered to close in Miami-Dade County in late March and began to reopen June 1. The Shore Club is expected to reopen June 26. While South Florida real estate prices have dipped since March, most sellers aren’t desperate enough to meet buyers’ rock-bottom expectations, industry pros say. And while few hotels in Miami have traded since the pandemic upended the economy, the long-term impact on property values is still a question, brokers say. But like Shore Club, a host of deals that were in the works before Covid-19 are on hold or have been canceled altogether.

Read full story: www.therealdeal.com

Zulma Torres

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