ANNAPOLIS, Md.—Chesapeake Lodging Trust has closed on the previously announced acquisition of The Royal Palm located in Miami Beach, Fla., for a purchase price of $278 million or approximately $707,000 per key. The Trust entered into a new management agreement with HEI Hotels & Resorts to operate the hotel and a new franchise agreement with Starwood Hotels & Resorts and will be affiliated with Starwood’s new brand for independent hotels.
“We are thrilled to announce our entrance into the Miami-South Beach market with the fee simple purchase of The Royal Palm,” commented James L. Francis, Chesapeake Lodging Trust’s president and chief executive officer. “We have been looking for the right situation and are delighted to have found a high-quality, fully renovated asset in an outstanding location and with tremendous operational upside.”
The Royal Palm is located at Collins Avenue and 15th Street, in the heart of South Beach fronting the Atlantic Ocean. The Art Deco property contains 393 guestrooms, including 164 suites and 141 rooms offering ocean views. Each room offers an open layout with upscale residential elements and a 42-inch flat screen television, wireless HSIA, custom artwork, and a work or dining area.
The hotel features several food and beverage outlets. The Florida Cookery, a three-meal restaurant, serves regional Florida cuisine offering both indoor and outdoor options. The lobby lounge bar features light fare with a focus on cocktails at night and transforms into a coffee bar during the daytime. The South Shore lounge is located on the ground floor of the Lanai building and offers a full bar and a small plates menu.
Byblos, The Royal Palm’s featured restaurant, is located on the first two floors of the hotel’s Shorecrest building. The Mediterranean cuisine concept is operated by INK Entertainment via a 10-year lease arrangement with the hotel. Byblos is currently under construction by the tenant with a planned opening in April 2015. The two-story space features 150 restaurant and bar seats, a 30-seat outdoor patio, and a 2,000 square foot private dining and lounge room that can be used for flexible meeting space and private events.
The hotel has approximately 5,700 square feet of dedicated meeting and banquet space throughout six different meeting areas, including the 2,600 square foot Great Room which can accommodate up to 300 guests. There is also an additional 16,000 square feet of flexible outdoor meeting space via multiple patios and decks. Other amenities include a full-service spa, a fitness center, two separate swimming pools, and access to a private Royal Palm beach area with 300 chaise lounges and day beds along with beach side bar services.
From 1998 through 2002, The Royal Palm underwent a major redevelopment and reconstruction project to bring the resort up to modern building codes and standards, including the construction of the two 17-story towers, resulting in the nearly 400 rooms enjoyed today. Starting in 2010 and completing in late 2012, a comprehensive renovation with a cost of approximately $50 million was completed.
“The hotel is in excellent shape and conveys the contemporary feel of South Beach,” Francis continued. “We will execute upon our business plan that includes minor changes to the product offering, but we anticipate no disruption as we reposition the property.”
HEI Hotels and Resorts became the hotel’s new manager at closing of the acquisition. The Trust has entered into an interim franchise agreement with Starwood, under its Luxury Collection brand. The Royal Palm will then migrate to Starwood’s new brand upon its roll out and will be the first in this new soft brand, which is anticipated to occur within the next 60 to 90 days.