Tampa Bay real estate investor Ben Mallah seized on improving market conditions and sold a Sheraton-branded hotel in Fort Lauderdale for $28 million, which breaks down to $111,000 per key.
South Florida hospitality real estate sales are ticking upwards after stuffing a dry spell of activity induced by high financing costs.
Investor Arif Butt and his five partners bought the 253-key Sheraton Suites Fort Lauderdale at Cypress Creek at 555 Northwest 62nd Street, according to records and real estate database Vizzda. The buyers financed the deal with a $19.5 million loan from Dade County Federal Credit Union.
Butt’s partners are father-son duo Mushtaque and Fahr Juneja, Naveed Chowhan, Muhammad Wasim Sajid and Abdul Jabbar. All are physicians except Far Juneja who is with Kentucky-based brokerage Gulfstream Commercial Services.
Mushtaque Juneja is an anesthesiologist in Louisville, Kentucky, who invests in real estate as a side business. Chowhan is an oncologist in Indiana, Jabbar is a gastroenterologist in Indiana and Sajid also practices in Kentucky.
Completed in 1987, the eight-story building spans 265,000 square feet, according to Vizzda. Mallah, a well-known investor in the Tampa Bay area whose firm is Equity Management Partners, had paid $18.3 million for the hotel in 2018.
“Although we paid a very big price, we knew this would be one of the very unique kinds of property,” Butt told The Real Deal. “They don’t make [hotels] any more like that with big rooms, an atrium and restaurant and banquet facilities.
The partners plan $5 million in capital improvements, partly in a wager that business will come from bookings for the event spaces, Butt said.
This isn’t the first time Butt has invested with Juneja and Chowan in South Florida hotel investments. In 2009, the three partnered with Abdul Buridi to purchase the South Beach Plaza Hotel at 1401 Collins Avenue and The South Beach Plaza Villas at 1411 Collins Avenue in Miami Beach for a combined $12.3 million, records show. In February, they sold both properties for a combined $26.5 million to New York-based Blue Suede Hospitality.
Overall, investment sales across commercial asset classes slowed late last year. Following the Federal Reserve’s interest rate increases, buyers faced expensive financing costs and could’t pay as much as sellers expected for properties.
This year, hospitality deals have popped up. In July, the Nakash family of New York VE Group paid $23.5 million for the 80-key Beacon South Beach Hotel building at 720 Ocean Drive in Miami Beach.
Also this summer, Blackstone sold two adjacent hotels, the Hyatt House Fort Lauderdale Airport at 90 Southwest 18th Avenue and the Hyatt Place Fort Lauderdale Airport at 91 Southwest 18th Avenue, in Dania Beach to Kolter Group’s hospitality division for a combined $40.1 million.
That came on the heels of the Ardid family’s Key International buying the 100-key Perry Hotel at 7001 Shrimp Road in Key West for more than $37.6 million. Simultaneously, Integra Investments also bought the adjacent 288-slip marina for $29.7 million.