The ME by Meliá hotel in downtown Miami has been replaced by the Hilton-branded Gabriel with help from a $57 million bridge loan.
“We wanted to move toward a more competitive U.S. brand, and the biggest in the world are the Hilton and Marriott. Hilton just made the most sense,” said Raoul Thomas, CEO and founder of the company that owns the commercial space at the Marquis tower.
The 64-story, mixed-use building at 1100 Biscayne Blvd. comprises a hotel on the lower floors, condominiums on the upper floors, garage, pool deck, pool-deck townhouses that have been converted into hotel rooms and a restaurant.
Thomas’ CGI Merchant Group, a Miami-based alternative investment management firm that focuses on commercial real estate and infrastructure, owns the commercial space in the tower, which is the hotel, garage, pool deck, restaurant, billboards and parts of the condo segment including the balcony space and common areas.
CGI Merchant Group secured the $57 million bridge loan from Terra Capital Partners, a New York-based real estate credit asset manager. The loan closed in November, the hotel conversion was finished April 2.
The Gabriel has 130 rooms, one more than the 129-room ME by Meliá.
CGI Merchant Group opted to change brands after the ME by Meliá, which is part of Spain’s Meliá Hotels International S.A., didn’t take off as expected after opening in 2017. CGI originally opted for Meliá because it thought a Spanish brand would do well in Miami, which draws heavy tourist and business traffic from Latin America and Europe.
“We were hoping in the beginning that Meliá would be geared to the South American customer and the European customer that came to the U.S.,” Thomas said. “Once we got into the U.S. market and they didn’t have multiple hotels, they didn’t have the scale, it became very difficult for them to compete against the U.S. franchises. We made a decision after giving them two years that we wanted to move in a different direction.”
Meliá has about 6 million loyalty customers, much fewer than HIlton’s 87 million customer base.
“A segment of clients who will come from Hilton.com will be much greater than those coming from Meliá.com,” Thomas said.
The $57 million floating-rate loan, which is for two years with the option for a one-year renewal, wasn’t exclusively for the hotel switch. It also refinanced existing debt to repay a first-priority loan and convert a mezzanine loan into senior debt.
CGI and MSD Capital in 2014 bought the commercial portion of the tower with MSD Capital serving as both an equity partner and lender. MSD Capital is a private investment company that exclusively manages the assets of Dell Technologies CEO and founder Michael Dell and his family.
Terra Capital Partners at the time also issued a mezzanine purchase loan.
“Terra stepped in and refinanced out MSD, took out their first position and refinanced (Terra’s) mezzanine loan with one single mortgage,” Thomas said.
Originally, the hotel had 56 rooms, but CGI upped that to 129 in part by converting 14 three-story townhouses near the pool into 42 hotel rooms by essentially making each floor a hotel room.
“It’s very difficult to make 56 keys economically successful because you just don’t have scale,” Thomas said.
Evolution Hospitality, a California-based hotel and resort operator, has been retained to manage The Gabriel.
Other hotel changes include expanding the banquet and meeting space.
The Cvltvra restaurant replaced The One Group’s STK Miami last December.
CGI opted for a Curio Hilton brand, which allows hotels to keep their character rather than conforming to rigid specifications.
“It’s not like a Hilton where every Hilton has to look the same. It’s a soft brand,” Thomas said. “It has all the benefits of a Hilton hotel, but you are allowed to keep and create a character about the hotel itself.”