The new owner, a first-time collaboration between San Antonio, TX-based hotel developer Leddy Ventures Ltd. and Site Realty Inc., a company headed by California businessman Michael Mayer. The seller is President Casinos Inc. A provision of the sale provides for lease back to the seller for an initial term of seven months.
The property, for which the joint venture paid $6.5 million, is presently zoned to permit 300 condominium units. Leddy Ventures senior project manager Stephen Swan tells GlobeSt.com the first phase of the project is to convert the 179 hotel rooms into about 70 condominium units.
About $60 per sf will be spent on interior renovation, consisting of all new flooring, wall and window treatments, kitchens and appliances, as well as new central air and heat and new boilers. The conversion budget also includes another $500,000 on exterior facade, balconies and landscaping.
Swan says the units will be 70% pre-sold before commencement of construction. It is anticipated that the condo conversion will begin this fall. Once completed, the former hotel will bear the name Ocean Beach Club at Biloxi. The two new residential towers, which will have between 15 and 17 floors, also will be 70% pre-sold before construction commences. Swan estimates construction costs for the two new towers to be between $150 and $170 per sf. All of the condos will be run as a "condominium hotel," which is to say the owner of each residential unit will have the option of putting that unit into a rental pool during periods when the owner is not using it.
Swan says this project is Leddy Ventures' first foray into both Mississippi and condo conversions. Swan says the company has heretofore been a hotel owner in the purest sense, but was able to acquire the property at a very good price relative to the surrounding real estate and, upon completing market research, a conversion turned out to be the highest and best use for the property.
Drake Leddy adds that one primary market for this project will be the upper Midwest. Owners from this area might come south for the winter but move back to their permanent home for the rest of the year. Another primary market will be individuals looking for an eventual retirement residence. "The may have the capital to invest now, and they might want to lock in to a residence that may or may not be available at their actual retirement date," says Leddy. "So they buy the residence now and then put it into the rental pool until they are ready to retire."
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