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MARICE COHN BAND/HERALD FILE
RENOVATION TIME: Though the Shore Club boasts one of the
most opulent pool decks in South Beach, the rooms need
work before people would buy them, says hotelier Ian
Schrager. He expects to spend $20 million in renovations.
TIME TO
GO
CONDO?
SICK OF THE SHORE CLUB TURNING YOU
AWAY? YOU MIGHT BUY A ROOM THERE. THE
CLUB IS WEIGHING WHETHER TO CONVERT.
BY DOUGLAS HANKS III
dhanks@Lherald.com
South Beach's notoriously exclusive Shore Club may sell off its
hotel rooms to the general public,joining a financial trend reshaping
South Florida's vaunted lodging industry.
Ian Schrager says he is still running the numbers but that he is
leaning toward joining his partners in making the oceanfront
celebrity haunt a hotel-condo property,where individuals would
own all 325 rooms there.
"I'm bullish on the idea,"said The last several years have seen
Schrager, whose nearby Delano some of the industry's strongest
hotel helped launch South brands, including Four Seasons
Beach's turnaround in the 1990s and Ritz-Carlton, launch condo-
from grim retirement village to hotel complexes in South Florida.
sexy playground. Low interest rates and the allure
But the Studio 54 founder who of owning a piece of a hotel have
led South Beach trend-making for fueled rapid sales at more than
more than a decade said he still two dozen hotel-condo projects
must determine whether this lat-
est one has passed him by. •TURN TO CONDO,4C
, v:=-r:•`C',enoughtheNew
4C I THURSDAY,SEPTEMBER 16,2004 A
REAL ESTATE I T FRONT PAGE
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CHUCK FADELY/HERALD FILE al
CONSIDERING A CONVERSION: Hotelier Ian Schrager says 'i
he is leaning toward joining his partners in making the ',
oceanfront Shore Club a hotel condo property. u'
u
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Shore Club f_
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wee hs whether I i
to o condo
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•
•CONDO,FROM IC Shore Club conversion does
not signal trouble there.
announced from Palm Beach Owner Philip Pilevsky
to Islamorada. opened the Shore Club
"There's more demand weeks before the Sept. 11,
than there is supply," said 2001,terrorist attacks,which
Scott Ber- caused an extended down-
man,a Price- turn for the industry. The
waterhouse- following year, Pilevsky
Coop ers brought in Schrager to run
analyst in thehotel.
Miami. "It's
more than a CLIFT HOTEL CASE
trend." Schrager's posh Clift
But with a Hotel in San Francisco filed
SCHRAGER growing ros- for bankruptcy protection in
ter of condo- August 2003 at a time when
hotel projects underway or Schrager was scrambling to
announced, there are wor- refinance$355 million worth
ries of a coming glut.Indeed, of debt on four other hotels,
Schrager said he has hesi- including the Delano. Last
tated signing off on convert- month his hotel company,
ing the Shore Club in part Morgans Hotel Group,
because he's uncertain announced a $475 million
where the condo-hotel mar- recapitalization package
ket will be two years from from new lenders.
now — particularly with The Clift remains in
interest rates rising. bankruptcy, but Schrager
"There are some timing said the Shore Club has
issues involved," Schrager exceeded his expectations.
said in a telephone interview He described a condo con-
from his New York office. version as an "opportunis-
Hotels have turned to the tic" maneuver to tap into a
condominium concept as a seller's market and raise
way to raise millions of dol- more than $200 million in
lars in capital by selling off cash.
rooms in the real estate mar- Still, he said he was not
ket. Individual buyers typi- considering converting the
cally loan their units back to Delano,which he owns out-
the hotel in exchange for a right,because"that thing is
share of the rental revenue. so successful."
Though the Shore Club
NEW CONCEPT. boasts one of the most opu-
Despite its growing popu- lent pool decks in South
larity with developers, the Beach,the rooms need work
condo-hotel is such a novel before people would buy
concept in South Florida them, Schrager said. He
that analysts say it is too expects to spend$20 million
early to decide their perfor- in renovations during the
mance as real estate invest- conversion, including add-
ments.Berman cited a hand- ing kitchens to each room.
ful of complexes open long He sees a Shore Club life
enough to offer a track as a big selling point,buck-
record, and other analysts ing what industry experts
say they've seen uneven per- said is the tendency of most
formance when it comes to condo-hotel owners to rent,
condo-hotel units' rental their units rather than visit
revenue and property val- them.
ues. "I embrace the idea of
"The jury's out," said blurring the distinction
Michael Cannon, managing between a residence and a
director of Integra Realty hotel," he said. "Tt's almost
Resources. like getting a second home
Converting rooms to con- on the beach and part of the
dominiums lets hotel own- whole lifestyle thing the
ers cash out of a property, Shore Club has to offer."
while usually retaining Schrager declined to dis-
lucrative contracts to man- cuss prices,though the New
age the front desk, restau- York Post quoted him in
rant and other services. June saying units would cost
Meanwhile, they pass on from a few hundred thou-
most of the risks of owner- sand dollars to several mil-
ship in a notoriously up-and- lion dollars.He said the Post
down industry to the new mention has brought a crush
room owners. of inquiries from would-be
"For the most part,you're buyers,including a selection.
out of it,"said Joel Greene,a of the bold-faced names the
sales agent at the Condo . Shore Club craves.
Hotel Center brokerage in "It's the same kind of peo-
North Miami. ple that you read about in
Schrager recently faced a the gossip columns,"he said.
well-publicized cash crunch, "Those are the very same
but he said the notion of a people who want to buy."