Related built six condo projects in Downtown Miami and the Brickell Area during the 2002-2007 housing boom. Icon Brickell is the last project to come on line. The market value of a hotel, as with most income-producing properties, is largely based on its revenue history. Determining the value of the newly opened hotel will be difficult.

"Selling a hotel in today's market without even having a track record, means they are going to have to accept a price that is probably not much more than their construction cost," says Mel Roth, president of International Mortgage & Equity Advisors of Florida in Parkland. "Without a track record, you have an asset that no one knows what it is worth. You are not going to be able to sell it at a premium under any circumstances. It is absolutely impossible." That means Perez may have to sell at a discount. Wien, who often represents European and Latin American funds, indicates his clients are only interested in cut-rate properties.

Hotel buyers that need financing are likely to come up empty-handed, Roth adds. "It is more difficult to get a permanent loan on a brand-new hotel than it would be getting a construction loan to build a hotel," he says. Lenders will finance about 65% of the value a hotel if the operator can prove its net operating income generates at least 140% of the debt coverage, he explains.

Roth knows how hard it is to land financing since the financial market began to implode in late 2007. After more than a year of negotiations, he helped secure a $250 million loan in October to complete construction of Met 2 Financial Center in Downtown Miami. Met 2 will be an office tower that will include a hotel under the JW Marriott Marquis Hotel Beaux Arts name. Roth had initially negotiated the loan with Bank of America and Wachovia, but as the credit market deteriorated, the banks had to join forces with HSBC Bank, RBC and Bank of Scotland to come up with the $250 million loan.

In relation to the hotel market, the recession is taking a toll on tourism, one of Florida's main economic engines. Owners are seeing room rates slide and occupancy levels drop. Miami's Downtown and Brickell areas saw the hotel occupancy rate fall to 60.8 % in December 2008 from 64% in December 2007, a drop of 5.1%, according to the Greater Miami Convention & Visitors Bureau. Countywide, the hotel occupancy level declined by 8.5%. Daily room rates in Downtown and Brickell slipped to $168.30 from $189.90, a drop of 11.4%. Countywide, room rates declined 6.6%.

"We are now at a point where we have peaked in terms of rates and occupancy," says Guy Trusty, a hospitality consultant in Coral Gables. He explains that the hotel industry began a downward trend in early 2008, after almost seven years of growth.

Hotel values across the nation are expected to plummet by up to 30% in 2009, reveals Scott Smith, vice president of the Atlanta office of PKF Consulting, a hospitality and real estate advisory firm. In an indication of falling values, declining revenues are increasing capitalization rates, a measure of cash flow that determines a property's market value. In the last year, cap rates of luxury hotels have increased one to two basis points, to more than 8.5%, lowering the market value of properties, says Wien, with Holly Sime Real Estate in Coral Gables. "It means your money goes further as a buyer," adds Trusty.

Kor Hotel Group, which also operates the Tides in Miami Beach, is introducing the Viceroy brand to South Florida through Icon Brickell. Hotel rates at Viceroy Miami start at $500 a night. The fact the hotel flag doesn't have much name recognition in the region won't help boost the sale price or improve the chances for financing, Roth comments. Kor did not return a call for comment before deadline.

In the last six months, Related has refinanced and sold at big discounts condos it couldn't sell at two of its new high rises in Miami-Dade. In December, Related's TRG-Harbour House affiliate sold 101 units for $27 million in Bal Harbour's New Harbour House, a condo conversion project. Related sold the units at prices as much as 60% below the cost of units sold to individual buyers in the last two years.

In July, Related sold 146 condos for $36.4 million in the 50 Biscayne condominium tower in Downtown Miami. The bulk buyer at 50 Biscayne was a company owned by Related and an equity partner, Lubert-Adler Partners of Philadelphia. Related and Lubert-Adler bought out Atlanta-based Cousins Properties, which built 50 Biscayne in partnership with Related. The price per unit in the 50 Biscayne bulk purchase averaged $247,739 at a time when individual condos on Biscayne Boulevard were selling for an average of about $309,936. A few months later, Related and Lubert-Adler financed some of the condos acquired in the bulk deal with a $20.87 million loan from Prudential Insurance Company of America.

If Related doesn't find a buyer or investor for the Viceroy, the company may have to negotiate with LaSalle Bank for a loan extension. "The natural thing to do in today's market is you go back to the construction lender, who has to recognize that there is no financing available for a hotel with no track record," says Roth.

Paola Iuspa-Abbott can be reached at [email protected].