David Martin’s Terra is offering half a billion dollars to buy out the Castle Beach Club condominium building in Miami Beach, The Real Deal has learned.
The offer comes months after condo giant Related Group and 13th Floor Investments withdrew their $500 million bid for the 57-year-old property 5445 Collins Avenue.
Castle Beach Club, an 18-story, roughly 570-unit condominium, has been on the market for more than a year with a Colliers South Florida team led by Ken Krasnow and Gerard Yetming. Nine firms bid on the property last year, including a joint venture between Related and 13th Floor. Terra was one of the firms, according to a source.
Terra did not respond to questions about the structure of the proposed deal. The Coconut Grove-based development firm, led by CEO Martin, declined to comment.
Many units are operated as short-term rentals, but some owners live in the building. Crescent Heights converted the building from a hotel into condos and sold the units in the early 1990s, records show.
Terra is preparing contracts for individual unit owners, which will be distributed within the next two weeks, according to a letter sent to unit owners on Friday and obtained by TRD. The unit owners would have roughly two months to accept or reject the offers, the source said.
Yetming wrote in the letter that after “extensive discussions” with Terra about its financing, the firm “has the capability to complete this purchase and has the funding in place to do so.”
“The economy and the financial markets have been badly affected by recent interest rate increases,” Yetming wrote. “As you will recall, these external factors were the primary reason for the withdrawal of the previous investor group at the end of last year.”
Castle Beach Club, built in 1966, has had a handful of unsafe structure violations, records show. A group of violations dating back to 2019 was resolved in October, according to the city’s database.
Older buildings have been in the limelight in the months and years following the Surfside condo collapse. Ninety-eight people died when the oceanfront Champlain Towers South came down overnight in June 2021. The building was next door to Eighty Seven Park, a luxury condo developed by Terra and its partners. Insurers for Eighty Seven Park’s general contractor, the Terra-led entity that developed the project and the condo association kicked in nearly $300 million to the $1 billion-plus settlement tied to the collapse, without admitting any responsibility.
The 4-acre Castle Beach Club site is zoned RM-3, which means a 500,000-plus-square-foot project with nearly 600 units could be built. The zoning allows for a 200-foot-tall development, or about 20 stories. The property has 576 feet of beach frontage.
Owners of units in older buildings may be more incentivized to sell, as they face deadlines to comply with new statewide condo safety legislation, financial reserve requirements, increasing construction costs and insurance premiums. But developers are more cautious now that the market has slowed and financing has become more challenging to secure.
If Terra receives enough support to complete a bulk purchase, it would then move to terminate the condo and knock down the building to make way for a new project. One recent example of this is Related and Two Roads’ bulk purchase of the former Carlton Terrace in Bal Harbour, where they are now in presales for the planned Rivage luxury condo building.
Terra has ramped up across South Florida with dozens of projects. In Miami Beach, they include Five Park, a luxury condo tower it’s building with developer Russell Galbut at the entrance to South Beach; a mixed-use development in North Beach; and the planned Miami Beach Convention Center Hotel.