Manuel de Zarraga, Max Comess and Cyrus Vazifdar ()
Dealmakers: Manuel de Zarraga, Max Comess and Cyrus Vazifdar
The Deal: The HFF team helped arrange the $68.5 million sale of Miami Beach’s Raleigh hotel.
Details: While a motivated buyer with an interest in getting a deal done quickly might sound like a seller’s dream, sometimes the buyer’s enthusiasm can shake up the basic story line of a transaction and force the seller to rethink its game plan.
That’s what the HFF real estate investment banking team faced when representing the seller of the Art Deco-style hotel at 1775 Collins Ave. in Miami Beach.
The company that disposed of the oceanfront property, a partnership between David Edelstein’s Tristar Capital and Sam Nazarian’s sbe Hotel Group, engaged HFF with the idea of finding a third-party hospitality group that would join them in an operating partnership. Edelstein and Nazarian paid $55 million for the hotel in 2012.
As they were marketing the deal, an HFF banker said an unexpected party approached the team with an invitation to buy the hotel outright, forcing them to retool their pitch.
“We had been engaged to bring in a partner; the hotel wasn’t really even for sale,” said Comess, an HFF director who helped broker the sale. “The plan was to find a traditional partner to come in on a partial basis and renovate and operate. As we were out in the market talking to these groups, we were approached by Hilfiger Hospitality, and they said, ‘Why don’t we come in and do an outright purchase? What’s the number?’ Next thing we know the conversation really shifted from a joint venture proposal to a sale.”
Comess said the whole process happened on a whirlwind schedule.
“It was very quick. It was a matter of weeks” from the initial approach until the parties were under contract.
The deal was interesting because it combined both the current asset with opportunities for future development and the sale of a brand that could be used as a cornerstone for future expansion, he said.
The Raleigh “is a place where you can have a luxury experience but you’re not on display,” Comess said. “Even if you’re famous, you can enjoy it in a more low-key way.”
Comess said that pitch clicked with the Hilfiger Hospitality management, who went as far as adopting the Raleigh name for the operating division of its hotel brand.
“They’re getting an iconic hotel, but they’re also getting a brand that involves this luxury hotel and which you can try to replicate in other cities,” Comess said. “It’ll help them catapult into new markets.”
In a way, that’s different from other recent deals for Miami Beach hotels, where hospitality groups active elsewhere have bought South Beach properties with the idea of renovating them and slapping their flag on them.
But in another more important way, Comess said the deal is similar: it provides a budding hotel company with the opportunity to showcase its South Florida property.
Comess said people buying hotels in the city right now “see Miami as a place they have to be in to be taken seriously.”
Quote: “If you’re not in Miami with a spectacular property, you’re not going to be competitive on the global stage as a luxury lifestyle brand,” Comess said.
Background: De Zarraga is HFF executive managing director, Comess is an HFF director, Vazifdar is an HFF associate director. They were assisted by Claudia Steeb, a managing director in the Pittsburgh office of HFF, and Dan Peek, senior managing director in the company’s Tampa office.