Delays spell trouble for the Conrad Fort Lauderdale Beach
Rendering of the Conrad Fort Lauderdale Beach (Inset: Andreas Ioannou)
What was once a failed Trump-branded project on prime beachfront land appeared to be saved when a new developer swooped in three years ago with a grand plan.
But the fate of the Conrad Fort Lauderdale Beach now seems to be up in the air again, with the condo-hotel facing months of delays, a construction lien from its general contractor and an opening date that hinges on a yet-to-close refinancing deal.
Orchestra Hotels + Resorts, led by Andreas Ioannou and Jose Luis Zapata, bought out the languishing project at 551 North Fort Lauderdale Beach Boulevard for $115 million in 2013.
At the time, Orchestra’s plans were to spend $40 million on finishing and revamping the building into a modern tower with 290 units, split between 109 condos — dubbed the Ocean Resort Residences — and 181 condo-hotel units.
Hilton Worldwide’s Conrad Hotels and Resorts brand was also brought on to head the property’s leisure services and manage the condo-hotel units.
Fast forward three years, and those plans have changed. Ioannou told The Real Deal that the project’s budget is now closer to $70 million, with the extra expenditures going toward upgrading the building’s public areas to better compete with nearby upcoming luxury projects like Auberge Fort Lauderdale and the Four Seasons Hotel and Private Residences.
“We felt we had to do more to make sure we lead the market,” he said. “That has led to delays.”
Orchestra originally slated the Conrad to open in early 2015, though that date was pushed back several times and is still uncertain.
Ioannou said the opening hinges on refinancing Orchestra’s construction loan with a better interest rate — a deal he said should close within the next two weeks. Once the loan is in place, Hilton’s management team can begin the three-to-four month process of getting the hotel ready for opening.
In the meantime, the building’s units will sit untouched despite receiving a full certificate of occupancy from city officials in June. Ioannou said condo owners are allowed by law to occupy the condos, but without furnishings or a functioning hotel, there would be little point.
And according to Broward County records, the developer is now facing a $1.4 million construction lien from its general contractor, Moss & Associates. The firm declined to comment, but Ioannou said he can’t close any condo purchases until the lien is lifted. About 35 percent of the project has been sold, and Ioannou said roughly half of those deals have closed.
County records show closings began as early as 2014, meaning buyers at the project have waited years for the project to open. Meanwhile, Ioannou said, the development team has committed to covering property taxes and “share fees” for all units until the hotel opens.
Though Ioannou was optimistic that the project would move forward as intended, others familiar with the development said the warning light is blinking.
Philip Gutman, vice president of sales at Douglas Elliman’s development marketing division, said his firm and the developer parted ways after less than a year in 2014.
“I think the project was designed in an era that the condo-hotel model with smaller units worked,” Gutman told TRD. “We had some suggestions but [the developer] didn’t really work off of them, and finally Cervera took over when we left.”
Sales are now being handled by Cervera Real Estate, with prices starting in the $400,000s and ranging to more than $1 million.
It’s not unusual for projects to cycle through marketing firms during development, but Gutman said it was his firm that decided to cut the cord. Peggy Fucci’s brokerage One World Properties also headed sales at the Conrad for a brief period when the project first launched.
Over budget and delayed, Orchestra is now finding itself in a situation similar to the one that led the former owners to abandon the project. Formerly known as the Trump International Hotel & Tower, the project originally launched in 2004 with Roy Stillman’s SB Hotel Associates as the developer and a licensing agreement from Donald Trump.
But construction was halted amid a litigation firestorm between buyers looking to get their deposits back from a sinking ship and the developer, who ran out of financing before finishing.
The situation was messy: court documents reveal complaints from buyers who felt they were misled by marketing materials into thinking Trump was the developer. Trump fired off another suit at Stillman for an alleged breach of contract, stating he costed Trump millions of dollars and damaged his reputation.
When asked if Orchestra would sell the development, Iannou said, “That is not part of our business plan, though you should never say no if someone comes in and wants to spend a lot of money. Our objective is to keep the hotel for years to come.”
Source:: The Real Deal