Jorge and Jon Paul Pere with Arnaud Karsenti and Castle Beach (Colliers South Florida, University of Miami, Wikipedia, )
Owners of an aging, oceanfront condo building in Miami Beach who banded together late last year in hopes of finding a bulk buyer have their wish granted.
The Related Group and 13th Floor Investments offered $500 million to buy out the owners of Castle Beach Club, a roughly 18-story, 570-unit condominium at 5445 Collins Avenue. Now it’s up to the owners to decide whether they plan to accept the offer.
The deal would be contingent on a majority of owners agreeing to sell, so that the developers can ultimately terminate the condo association and build a new project on the site.
The Castle Beach association hired Colliers South Florida to list the 4-acre property for sale last year, months after the deadly collapse of Champlain Towers South in Surfside. The collapse shined a light on the expensive upkeep required to maintain older waterfront buildings.
Many older properties require restoration and repair projects that are expensive, lengthy, and often result in special assessments for unit owners. Plus, they don’t add value for the unit owners, experts say. Castle Beach is among those buildings. In July, it received an unsafe structure violation from the city of Miami Beach that required emergency shoring. The notice cited concrete spalling and cracking in the garage.
The Castle Beach property, with 576 feet of beach frontage, was built in 1966. The majority of units are operated as short-term rentals. It’s zoned RM-3, which allows for more than 500,000 square feet of development and 150 units per acre, or close to 600 units overall. The zoning allows for a 200-foot-tall development, or about 20 stories.
If Related and 13th Floor’s joint venture ends up buying the property, the deal would break down to an average price of about $877,000 per unit, though each seller’s price would likely depend on their share of ownership, which is based on square footage.
Related and 13th Floor said in a joint statement that they look forward to working with owners and the city of Miami Beach to redevelop the site “into a world class property.”
In a notice from the Castle Beach association to unit owners, Colliers said that it received nine qualified offers and had narrowed that down to four companies that were interviewed in early March.
“We are confident that this pricing cannot be duplicated, and we have identified the team that can close and deliver to each unit owner a significant premium over the current market value if sold individually,” the Colliers statement says.
Bulk buyouts are notoriously difficult to close, as unit owners can become divided on who to sell to if there are multiple offers. Yet, the timeline and pace of these deals appear to be accelerating in the wake of the collapse. And some unit owners in buildings like Castle Beach are joining together and marketing their building to prospective buyers to avoid a deal falling apart.
Last year, Related Group joined Two Roads Development to acquire all of the units at the Carlton Terrace condominium in Bal Harbour for roughly $130 million. Zoning for the nearly 3-acre oceanfront property would allow for a new residential building 275 feet tall or about 28 stories
