Hospitality Sector Continues Recovery as Iconic South Beach Hotel Sells

An iconic South Beach hotel on Ocean Drive has sold, marking an exciting comeback for the hospitality sector in South Florida.

The acquisition comes at a good time as demand in the hospitality sector is improving after hotels took a hit during the COVID-19 pandemic. According to Marcus and Millichap’s hospitality midyear outlook special report, the availability of vaccines has allowed more people to travel which has raised hotel occupancy in the country from 24.5% in April of 2020 to over 60% in June of 2021.

Optimum Asset Management, a boutique real estate investment manager in Coral Gables,  completed the sale of Celino South Beach Hotel to CGI Merchant Group, an investment management firm in Miami.

CGI Merchant Group used money from its Hospitality Opportunity Fund I, a $650 million fund in which former baseball superstar Alex Rodriguez’s A-Rod Corp. and joint venture partner Adi Chugh of Surya Capital Partners are investors. The buyer didn’t disclose the price. 

“Optimum’s multi-year process of expansion and renovation has revitalized the historic Celino South Beach site, transformed its global brand and helped to spearhead the relaunch of Miami’s Ocean Drive,” said Rodolfo Misitano, CEO at Optimum Asset Management in a written statement.

Domestic leisure trips are currently driving most business, with total spending expected to improve by about 20% this year after dropping by roughly 25% in 2020, the report said. However, hospitality markets like Miami, which rely heavily on global tourism, may take longer to fully recover until international travel restrictions ease. 

Although hotels are recovering, there are still challenges. According to the special report, financing is hard to obtain for many hotels, as lenders are examining deals on a case-by-case basis and are favoring borrowers with whom they have established relationships, income, proven credit worthiness and track record when it comes to accessing capital and recent property performance. CMBS lenders are currently the primary source of capital.

Celino South Beach, which is expected to reopen this fall, is made up of four buildings which also include The Imperial Hotel, Park Central Hotel and Heathcote Apartments. The property also includes two swimming pools and three restaurants. The hotel is a two-minute walk from Miami beach and has 132 ocean-view rooms and 26 suites. 

The sale follows Optimum’s over $40 million renovation of the Celino Hotel in 2015. Optimum has refurbished all suites, bars and restaurants and connected all four of the site’s buildings. The Art Deco hotel was built in 1937 and is the largest hotel on Ocean Drive with 132 ocean-view rooms across four buildings.