The high-end furnishings retailer formerly known as Restoration Hardware planned to spend $100 million to renovate and brand the historic Savoy hotel in Miami Beach.
RH, led by CEO Gary Friedman, was finalizing a lease for the entire Savoy Hotel & Beach Club. RH planned to convert the Ocean Drive property into a “state of the art” hotel with retail space, RH showrooms, RH-run food and beverage operations, and an RH beach club, documents included in a recently settled lawsuit reveal. The plans were included in filings tied to RH’s lawsuit against its landlord in the Miami Design District, which was settled last week.
It’s unclear if the deal between RH and the Savoy’s owner, New York-based Allied Partners, is still in the works, since the lease’s expected start date has passed. Corte Madera, California-based RH was negotiating a 49-year lease term that would have started in mid-March of this year. RH would pay $7 million to $9 million in annual rent and cover the cost of the renovations.
The lease for the two Art Deco buildings at 425 and 455 Ocean Drive was in its final stages, and Allied had hired Ackman-Ziff to secure long-term, fixed-rate financing for the property, according to an attachment included in the lawsuit. Emails show that Ackman-Ziff was finalizing the lease about a year ago.
Allied Partners, RH and Marc Warren of Ackman-Ziff did not respond to requests for comment.
Allied Partners, led by founder and CEO Eric Hadar, litigated to acquire the hotel during the Great Recession after it had purchased the defaulted note backing the property, according to the financing pitch. The historic property was completed in 1937 and 1941.
“Given the property’s large size and oceanfront location and Miami Beach’s supply/demand dynamic, Hadar selected the RH net lease strategy as the one that best meets his tax, operational and strategic goals,” Ackman-Ziff’s pitch reads.
Allied Partners, meanwhile, recently sued an architect and engineer who allegedly tore down portions of the Savoy without the owner’s authorization. Allied is seeking $50 million from architect Kevin Gore and Miami-based engineer Elvis Torres and his company, Ortus Engineering.
In the Miami Design District, RH planned to open a temporary flagship in a group of buildings owned by Apollo Commercial Real Estate and Michael Comras. The furnishings retailer sought to connect the properties into a combined title so that RH could operate one single gallery/store with pathways. RH alleged in the lawsuit it filed early this year, which was recently settled, that Apollo and Comras were stonewalling its plans.
RH has been expanding further into hospitality and branded real estate. It recently opened its first RH Guesthouse in New York, with two restaurants, nine guest rooms and a rooftop infinity pool. In South Florida, it opened a $26 million West Palm Beach gallery and restaurant in late 2017.
This month, RH revealed plans for a major mixed-use project with a guest house, residences, winery and possibly an organic farm on an 850-tract of land the company purchased this summer in Napa. In a recent earnings call, Friedman also said that RH was close to closing on a property in Europe.
Keith Larsen contributed reporting.