In the fall of 2023, developer Michael Shvo told a crowd of real estate professionals that buyers were paying up to $12,000 per square foot for condos at the planned ultra-luxury Raleigh project in Miami Beach.
“We probably have the most expensive product in Miami Beach,” Shvo said at The Real Deal’s Showcase and Forum. “We are seeing high-profile buyers,” including from Middle East countries like Qatar and Turkey.
At the time, Shvo was leading the planned redevelopment of the Raleigh, South Seas and Richmond hotels on Collins Avenue into a 60-key hotel and 42-unit condominium. The project was closely followed by many who wanted to see the iconic Art Deco Raleigh brought back to life after years of dormancy.
It also marked Shvo’s trophy asset in one of the hottest markets in the country, where his pipeline also included three planned Class A office projects in Miami Beach.
But just two years later, Shvo this month sold the Raleigh assemblage to New York-based Nahla Capital for $270 million. In September, he sold The Alton office development site via a deed-in-lieu of foreclosure to Infinity Collective for $28.3 million.
An affiliate of New York-based Shvo, the developer’s company, still owns an office development site on Washington Avenue in Miami Beach. The third office project was planned for the clock tower building on Lincoln Road, but Shvo did not end up purchasing the property.
The sale of the Raleigh marks a dramatic exit for Shvo. He declined to comment for this story through a spokesperson.
Shvo’s timeline
Shvo made a big splash in 2019 when he and his then-partners, Bilgili Holdings and Deutsche Finance America, acquired the three hotels that make up the nearly 3-acre Raleigh assemblage, paying a combined $242.9 million. That included Tommy Hilfiger and the Dogus Group’s sale of the Raleigh at 1775 Collins Avenue in Miami Beach for $103 million earlier that same year. The property, known for its fleur-de-lis-shaped pool, had been shuttered since Hurricane Irma hit South Florida in September of 2017.
Turkish investor Serdar Bilgili’s Bilgili Holdings eventually exited the project following a court settlement of a dispute with Shvo.
Shvo and his team worked on plans for the project, and in 2022 marked a few milestones. The Miami Beach Historic Preservation Board approved changes that allowed for a deeper underground garage.
Shvo also announced that Rosewood Hotels & Resorts would brand the planned 17-story, 44-unit condo tower and manage the 60-key hotel. Cheval Blanc, a luxury hotel group owned by LVMH Moët Hennessy Louis Vuitton, was expected to brand the hotel, but that deal fell through, sources told TRD at the time.
A year later in 2023, Shvo launched condo sales. The developer tapped Oren and Tal Alexander’s Side-backed brokerage, Official, to lead sales and marketing. But the developer took a more extreme approach than the competition, one that industry experts said contributed to the project’s downfall. The invitation-only strategy focused on Rosewood VIPs and friends of Shvo and New York architect Peter Marino. (Marino designed the plans along with Kobi Karp Architecture & Interior Design.)
In the summer of 2023, Shvo and his partners secured a $190 million refinancing originated by BH3, a Fort Lauderdale-based lender, investment and development firm led by Dan Lebensohn and Greg Freedman. It paid off a $146.9 million loan that Acore Capital provided in 2019.
Sources told TRD that presales lagged behind competitors such as Witkoff and Monroe Capital’s Auberge-branded redevelopment of the Shore Club property a few blocks away at 1901 Collins Avenue.
Some say the market for ultra luxury condo developments has softened following the post-pandemic boom. While most developers are delayed in completing their projects, construction under Shvo’s ownership never went vertical. The Raleigh was originally expected to be completed in 2026.
It didn’t help that a year after hiring Official, rape allegations against the Alexander brothers surfaced that ultimately led to Oren and Tal Alexander stepping away from the business, and developers who worked with the brokerage severed ties.
Ana Bozovic, broker and founder of Analytics Miami, said Shvo’s sale of the property is more of a reflection of the challenges the capital markets are facing than it was about his sales strategy.
“When I see that this project has failed, with the construct of his involvement, the first thing that comes to my mind is challenges with capital markets,” Bozovic said. “[Developers] who had time pressure to perform have been ultra-challenged.”
Bozovic said that buyers with cash to spend have options. The fact that the project’s performance and delays were publicized likely introduced fear into the project, she said.
Signs of trouble at the Raleigh continued to bubble up. Earlier this year, the Raleigh’s ownership hired Newmark to market the property to potential bidders. That’s how Nahla entered the picture with the winning bid.
Shvo had the right of first refusal and tried to match the offer, but ultimately sold the assemblage in October, when BH3’s most recent extension expired. Nahla has not yet revealed its plans for the project. Its co-founder and managing principal Genghis Hadi did not respond to a request for comment.
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