1675-6 Royal Palm Groove PRT
THE MIAMI HERALD
Copyright (c) 2004, The Miami Herald
DATE: Thursday, December 2, 2004 EDITION: Final
SECTION: Business PAGE: 1C LENGTH: 88 lines
ILLUSTRATION: color photo: R. Donahue Peebles (a) ; photo: Royal Palm Crowne
Plaza Hotel (a)
SOURCE/CREDIT LINE: BY DOUGLAS HANKS III, dhanks@herald.com
CALMLY WAITING TO SEAL THE DEAL - R. DONAHUE PEEBLES MAY HAVE SECURED A
RECORD PRICE FOR HIS ROYAL PALM HOTEL, BUT HE HAS YET TO CLOSE THE SALE
As he tries to complete a record $128 million sale for his Royal Palm
Crowne Plaza Resort, R. Donahue Peebles is fending off legal assaults that
could jeopardize his hold on the property, according to court filings and
government documents.
Peebles has signed an agreement to sell the 417-room South Beach hotel for
a price that he says can make most of his legal woes go away. But for now,
Peebles faces a default notice by the holder of the hotel's $54 million
mortgage and also is fighting the collection of a $17 million judgment from
the contractor that built the oceanfront hotel.
Meanwhile the $128 million sale to the Chicago-based Falor Co. hinges on
Peebles winning permission from Miami Beach to convert 160 rooms into
condo-hotel units. Resolving that issue will have leaders grappling with
concerns that the resort city's prized hotels are being sold off to investors
room by room.
"There's a need for the city to see what it can to do avoid the hotel
stock from basically evaporating from the city, " said City Commissioner
Richard Steinberg.
In all, selling the Beach's fourth-largest hotel will require Peebles to
assemble a jigsaw of legal, political and financial pieces - an appropriate
end-game for a venture beset by controversy and conflict for the past 11
years.
In 1993 Miami Beach invited African-American developers to build a resort
on city-owned oceanfront. The city also invested $10 million in the project.
The goal was to create a large hotel to attract conventions, and end a tourism
boycott organized by black leaders over simmering racial controversies.
But construction delays plagued the project, and the hotel opened four
months after the Sept. 11 terrorist attacks sent the Beach's tourism industry
into a tailspin. Those problems helped set in motion a series of disputes
among Peebles and his contractor, lender and the city itself - disputes that
are still in play as Peebles tries to sell the hotel.
In May, Clark Construction, the Royal Palm contractor, won a $12 million
judgement against the hotel over problems with the development effort, a
verdict that has now grown to nearly $17 million with legal fees and interest.
Peebles and his lawyers did not respond to requests for comments Wednesday.
But his lawyers have asked a federal judge to block collection of the
judgement, warning that otherwise —over 100 employees and thousands of guests
would be dramatically and adversely affected. "
Clark could try and force a sale of the hotel to collect its judgment,
though the Royal Palm could block that by posting a $17 million bond while it
appeals the ruling.
Peebles lawyers have asked a judge to waive the bond requirement too,
saying the market value of the hotel exceeds the hotel's $54 million mortgage
lir_
by "over $28 million. " This week, Peebles told The Herald he is prepared to
refinance the hotel for more than $100 million if the Falor sale doesn't go
through as planned.
He would probably need that cash to retire his increasingly contentious
fights with his lender and contractor.
Peebles was furious when Union Planters Bank sold the hotel's $54 million
mortgage last month to a group that included a New York hotelier on record as
expressing the want to foreclose on the Royal Palm.
That process appears to have begun. A lawyer for the hotelier and its New
York bank notified Miami Beach on Nov. 16 that it had issued a default notice
to the Royal Palm, an initial step required in a foreclosure action.
Peebles has said the hotel is current on its payments.
Chairman David Falor said Wednesday his deal is contingent on the
condo-conversion deal Peebles is negotiating with the city. City commissioners
approved the agreement last year in exchange for Peebles waiving his right to
sue Miami Beach over structural problems on the city-owned hotel site.
In recent weeks, city leaders have expressed growing concern about the
public dollars spent building convention-friendly hotels. The 790-room Loews
Miami Beach, another subsidized project, is moving to buy out the city and
faces no restrictions on converting to hotel-condominium units.
Steinberg, the city commissioner, said he feels the city is obligated to
proceed with the conversion deal. But City Manager Jorge Gonzalez raised the
possibility of retracting the deal when news of the potential sale became
public earlier this week.
On Monday, Peebles offered no hint he was worried. "I'm confident the city
will live up to its agreement that we spent the year negotiating, " he said.
CAPTION: MARSHA HALPER/HERALD FILE FOR SALE: The Royal Palm Crowne Plaza
Hotel in South Beach may go for a record $128 million.
JARED LAZARUS/HERALD FILE LOBBYING: R. Donahue Peebles waits in the lobby of
the Royal Crowne Plaza Hotel. He recently secured a record price for the
resort, but legal hurdles are making the deal a very slow process as lenders,
banks and the city are concerned with the deal's outcome.
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mh AFRICAN AMERICAN HOTEL PROJECT SNAGGED BY STRUCTURAL PROBLEMS 11/13/1998
THE MIAMI HERALD
Copyright (c) 1998, The Miami Herald
DATE: Friday, November 13, 1998 EDITION: Final
SECTION: Business PAGE: 1C LENGTH: 58 lines
SOURCE/CREDIT LINE: BARBARA De LOLLIS Herald Business Writer
AFRICAN AMERICAN HOTEL PROJECT SNAGGED BY STRUCTURAL PROBLEMS
Developer R. Donahue Peebles has hit a snag in building his $64 million
Royal Palm Crowne Plaza, Miami Beach's first major African American-owned
hotel.
Peebles' engineers declared the Royal Palm Hotel, one of two Art Deco
hotels being incorporated into Peebles' Royal Crowne Plaza, to be structurally
unfit. The city condemned the building three weeks ago, Peebles said.
Next week, Peebles Atlantic Development will ask the city for permission to
demolish the hotel, at 15th Street and Collins Avenue, and build a replica in
its place. Restoration, he said, is not a safe option.
"It would be major public safety hazard, and no amount of money can make
it stand, " Peebles said Thursday.
Riva, Klein & Timmons, structural engineers on the project, found the
structural concrete and reinforcement steel inside the Royal Palm deteriorated
"beyond use. "
A special meeting of the Miami Beach Historic Preservation Board is
scheduled for Monday, but regardless of how the advisory board votes, the City
Commission will make the final decision. Commissioners are scheduled to
consider the matter Wednesday.
"From the public's perspective, it's fortunate that we caught it now, "
Peebles said.
Two weeks ago, Peebles gave six members of the Miami Design Preservation
League a tour of the building. The members saw the hotel's deterioration, but
during an emergency meeting this week, they voted to protest its demolition,
said Michael Kinerk, the league's chairman.
"We think any building can be saved if enough time and money is spent, "
Kinerk said. "We also don't understand why the condition of this building was
not discovered one or two years ago. "
Peebles said the city did not allow him to inspect the building until after
he signed an agreement to take over the project.
Anticipating suspicion, Peebles said that if he had wanted to demolish the
Royal Palm, he would have suggested it long ago, before designing a new hotel
that straddles two existing hotels, with two elevator corridors.
"If I was making this argument two years ago, I could have capitalized on
economic savings that could come from it, " he said. "Now we're delayed by
about three months. It's going to increase costs significantly, so what we're
trying to mitigate the problem as best we can. "
After the building was condemned and certified in danger of immediate
collapse, Peebles said, he could have asked the city to approve demolition
without public comment, but didn't.
"We wanted to go through the process so we could have public comment, "
Peebles said. "It would have given the misperception that we were trying to
do something in bad faith. I wanted to act in good faith. "
If Peebles loses, he'll be required to restore the hotel, something he said
would add "significant" costs to the project. But, citing an engineering
test, Peebles says the building cannot be saved.
"The building has to go down, " he said. "There's just no alternative. "
Kinerk said the preservation league is investigating other Miami Beach
structures built by the Sayle construction company, which built the Royal Palm
in 1939, to see how they have held up.
TAG: 9811140488
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