Michael Shvo's Plan for 3 Miami Beach Oceanfront Hotels Aided by Legal Team
The New York developer and joint venture partners bought The Richmond and South Seas hotels for $140 million after acquiring The Raleigh for $103 million with plans to restore them and add a residential tower.
Big-name New York developer Michael Shvo’s $140 million acquisition of two Miami Beach hotels with two joint venture partners was no easy deal.
The purchase of The Richmond and South Seas hotels hinged on the city changing its code to allow a 200-foot residential tower behind the hotels.
Enter a Miami legal team from Greenberg Traurig.
Shareholders Juan Loumiet closed the deal Aug. 5 after shareholder Alfredo Gonzalez and associate Devon Vickers obtained the code amendment five days before.
A joint venture with Shvo, Turkish real estate conglomerate Bilgili Group and real estate investment manager Deutsche Finance Group bought the 117-key South Seas hotel for $52 million and the 92-key Richmond for $87.85 million.
The purchases came after the same group paid $103 million in February for the 105-room Raleigh Hotel, which had been closed since Hurricane Irma in 2017.
The price tag for the three hotels was $243 million, or $773,885 per room and the promise of more.
The three adjacent hotels are on the southeast corner of Collins Avenue and 18th Street. All were build in the 1940s and designed by prolific Miami Beach architect L. Murray Dixon.
After the Raleigh deal Shvo started looking at adjacent properties and how he could meld them into a bigger project, Gonzalez said.
“Being the visionary that he is, he was looking at The Raleigh itself and saw the abutting properties, both The Richmond and South Seas,” Gonzalez said. “He started looking at how to incorporate the neighboring properties into a very substantial iconic project for the city and South Florida.”
Shvo wanted to restore the hotels to their original glory with another revenue-generating aspect to justify the restoration and acquisition costs. He plans a residential tower up to 200 feet tall straddling the rear of the Richmond and South Seas hotels. The height required the city code change.
“The code between 16th Street and 21st Street where these properties are located had a restriction that you couldn’t built greater than 50 feet,” Gonzalez said. “The old code didn’t make it viable to add the residential component or a component that could generate the revenue to justify the purchase prices and restoring these three buildings to the grandeur that it originally had in the 1940s.”
Gonzalez and Vickers crafted the code amendment in the area for properties that sit on at least 115,000 square feet, a threshold Shvo’s three hotels meet. The City Commission approved the amendment July 31.
The code amendment was “what opened the door for Shvo and his partners to take the risk and have the vision to move forward,” Gonzalez said.
A complication was that the buyers needed to put The Richmond and South Seas under contract and get the code change before closing within a four-month time span.
“It was a very aggressive schedule, particularly because of all these moving parts,” Gonzalez said. “You are dealing with two other sellers, and they have their schedules.”
The sellers of The Richmond were Allan and Patricia Herbert, well-known philanthropists who opened the hotel in 1941. The South Seas seller was Synergetic Real Estate of Florida LLC and South Seas Hotel Corp. State corporate records show the company is affiliated with Newport, Rhode Island-based hotel company Yankee Development Corp.
Clothing designer Tommy Hilfiger and Turkish conglomerate Dogus Group sold The Raleigh.