JLL's Hotels & Hospitality group arranges $575M financing for The Diplomat Beach Resort

Rhea-AI Summary

JLL's Hotels & Hospitality group secured $575 million in financing for the Diplomat Beach Resort, a 1,000-room award-winning beachfront property in Hollywood, Florida. The five-year, floating-rate loan was provided by Citi, Deutsche Bank, Ohana Real Estate Investors, and the Canadian Pension Plan Investment Board. Managed by Trinity Investments and UBS Asset Management, the resort has seen a strong performance post-COVID, aided by Florida's robust lodging market. The Diplomat, managed by Hilton, features extensive amenities, including a $90 million renovation in 2018. JLL's involvement highlights their leading role in hotel financing and advisory services.

Positive

• Secured $575 million in financing for the Diplomat Beach Resort.
• Five-year, floating-rate loan from Citi, Deutsche Bank, Ohana Real Estate Investors, and Canadian Pension Plan Investment Board.
• The South Florida lodging industry is one of the best-performing markets post-COVID.
• Revenue per available room (RevPAR) in Florida's top 10 lodging markets exceeded the U.S. average in 2023.
• Extensively renovated with a $90 million capital plan in 2018.
• JLL's Hotels & Hospitality group has completed $83 billion in transactions over the past five years.

Negative

• The financing involves a significant debt load which may affect long-term profitability.
• The loan is interest-only, potentially leading to higher future repayments.
• Reliance on the fluctuating South Florida lodging market poses a risk.
• The financing structure includes mezzanine debt, which typically carries higher interest rates.

Insights

Financial Analyst

The $575 million financing for The Diplomat Beach Resort, organized by JLL's Hotels & Hospitality group, underscores the continued confidence in South Florida's lodging market. This financing arrangement, which includes a floating-rate loan and mezzanine financing, highlights the strategic financial planning involved to leverage low-interest rates while also managing risk through diverse lenders such as Citi, Deutsche Bank, Ohana Real Estate Investors and CPPIB. Investors should take note of the post-Covid recovery in the South Florida lodging market, with RevPAR surpassing national averages, indicating robust demand. Additionally, the planned renovation, alongside the existing comprehensive $90 million capital plan from 2018, suggests a focus on maintaining and enhancing property value, which is important for long-term returns.

Market Research Analyst

From a market perspective, The Diplomat Beach Resort is situated in an enviable position within South Florida’s thriving hospitality sector. The property's strategic location between two major airports enhances its accessibility, which is a significant competitive advantage. Moreover, the diverse amenities and extensive meeting and event spaces cater to both leisure and business travelers, broadening its market appeal. The South Florida lodging industry has shown notable resilience and growth post-pandemic, driven by increased leisure travel and demographic shifts. This context provides a favorable backdrop for The Diplomat's expected performance growth post-renovation. Investors should consider these market dynamics as indicators of the property's potential for sustained revenue and occupancy rates.

Investment Strategist

The strategic partnership between Trinity Investments and UBS Asset Management, alongside the involvement of major financial players like Citi and Deutsche Bank, reflects a well-coordinated effort to maximize the financial potential of The Diplomat Beach Resort. The addition of mezzanine financing by Ohana Real Estate Investors and CPPIB further diversifies the financial structure, spreading risk and leveraging different expertise. For investors, this structured deal architecture suggests a robust framework aimed at optimizing returns while mitigating financial exposure. The historical performance of JLL in the hospitality sector, with $83 billion in transactions over five years, reinforces the credibility and proficiency backing this project, which can instill confidence regarding its prospective financial outcomes.

The Diplomat is an award-winning, 1,000-key beachfront resort in Hollywood, Florida

HOLLYWOOD, Fla., June 17, 2024 /PRNewswire/ -- JLL's Hotels & Hospitality group announced today that it has arranged $575 million in financing for the Diplomat Beach Resort, an award-winning beachfront resort with 1,000 guest rooms in Hollywood, Florida.

JLL worked on behalf of the borrower, a joint venture between real estate funds managed by Trinity Investments ("Trinity") and funds managed by UBS Asset Management's Real Estate & Private Markets Multi-Managers business, to secure the five-year, floating-rate loan through mortgage lenders, Citi and Deutsche Bank. The interest-only loan also included mezzanine financing provide by Ohana Real Estate Investors and Canadian Pension Plan Investment Board (CPPIB).

JLL was also involved in the 2023 sale of the resort to Trinity and funds advised by UBS Asset Management, which represented the third largest single-asset hotel sale ever in the U.S. at the time. The South Florida lodging industry saw a tremendous recovery post-Covid making it one of the best-performing hotel markets in the country, benefitting significantly from an increase in leisure travel, recovery of group demand and the significant demographic shift into South Florida. According to JLL's State of the Florida Lodging Industry report, revenue per available room (RevPAR) in each of the state's top 10 lodging markets beat the U.S. average in 2023.

The Diplomat Beach Resort is currently managed by Hilton Hotels and Resorts under the Curio Collection by Hilton brand. Extensively renovated and repositioned through a comprehensive $90 million dollar capital plan in 2018, the Diplomat Beach Resort is a world-class beachfront meeting and events-focused resort. The resort features 1,000 guest rooms and suites and over 200,000 square feet of integrated meeting and events space. The property consists of a twin-spired, 36-story tower containing the hotel rooms, a 15,000-square-foot spa, six restaurants and bars plus multiple pools and cascading waterfalls. Additionally, the property is situated on 10 acres of Atlantic Ocean beachfront offering kayaking, paddleboarding and jet ski rentals.  

The Diplomat Beach Resort is ideally located between the two most significant airports in South Florida, Fort Lauderdale/Hollywood International Airport (10 minutes) and Miami International Airport (30 minutes), affording the resort unparalleled access to guests from major markets throughout the U.S., Latin America and Europe. The resort is known for its extensive offerings and multiple award-winning recognitions and accolades, including being awarded 2019 Best Family Resort by Travvy Awards, One of the Top Resorts in Florida by Conde Nast Traveler in 2018 and is the recipient of the AAA Four Diamonds Award®.

The JLL Hotels & Hospitality team representing the borrower was led by Americas CEO Kevin Davis and Managing Director Mike Huth.

"We are pleased to have represented Trinity in the financing of this iconic Florida beach resort, which is poised for outsized performance growth following a planned renovation, coupled with the ongoing strength of the South Florida lodging market," Davis added.

The Ohana Real Estate Investors team was led by President & Chief Investments Officer Franco Famularo and Managing Director Eddie Yu, partnering with CPPIB to structure the mezzanine loan.

"The Ohana credit team was grateful for the opportunity to refinance this irreplaceable property for Trinity," said Famularo.

JLL's Hotels & Hospitality group has completed more transactions than any other hotels and hospitality real estate advisor over the last five years, totaling $83 billion worldwide. The group's 350-strong global team in over 20 countries also closed more than 7,350 advisory, valuation and asset management assignments. Our hotel valuation, brokerage, asset management and consultancy services have helped more hotel investors, owners and operators achieve high returns on their assets than any other real estate advisor in the world.

For more news, videos and research resources on JLL, please visit our newsroom.

About Trinity Investments
Trinity is a private real estate investment firm with a 28-year history of specializing in value-add opportunities. Based in Honolulu, Hawaii, with offices in Los Angeles and London, Trinity focuses on unique real estate investments in world-class markets. As of April 2024, Trinity has invested more than U.S. $9.8 billion in the United States, Mexico, Europe, and Japan by leveraging its deep institutional knowledge and longstanding local relationships. For additional information, please visit Trinity's website at trinityinvestments.com. For updates on Trinity's investment activity, follow Trinity on LinkedIn.

About UBS
UBS provides financial advice and solutions to wealthy, institutional and corporate clients worldwide, as well as private clients in Switzerland. UBS's strategy is centered on our leading global wealth management business and our premier universal bank in Switzerland, enhanced by Asset Management and the Investment Bank. The bank focuses on businesses that have a strong competitive position in their targeted markets, are capital efficient, and have an attractive long-term structural growth or profitability outlook.

About Ohana Real Estate Investors
Ohana Real Estate Investors is a vertically integrated real estate investment firm with expertise in the hospitality and residential sectors, focusing on urban and resort markets throughout North America. Founded in 2009, Ohana invests across the capital structure through dedicated equity and credit strategies and currently manages approximately $3 billion on behalf of a global investor base, including university endowments, foundations, and family offices. For more information, please visit ohanare.com.

About JLL
For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of $20.8 billion and operations in over 80 countries around the world, our more than 108,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAY®. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com. 

Contact: Kristen Murphy, JLL Director, Public Relations
Phone: +1 617 543 4873
Email:  Kristen.Murphy@jll.com

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SOURCE JLL

FAQ

What is the value of the financing arranged by JLL for the Diplomat Beach Resort?

$575 million.

Who are the lenders involved in the Diplomat Beach Resort financing?

Citi, Deutsche Bank, Ohana Real Estate Investors, and Canadian Pension Plan Investment Board.

Where is the Diplomat Beach Resort located?

Hollywood, Florida.

What year did the Diplomat Beach Resort undergo a $90 million renovation?

2018.

Who manages the Diplomat Beach Resort?

Hilton Hotels and Resorts under the Curio Collection by Hilton brand.

Which companies are involved in the joint venture managing the Diplomat Beach Resort?

Trinity Investments and UBS Asset Management.

How did the South Florida lodging market perform post-COVID according to JLL?

It became one of the best-performing hotel markets in the country.

What awards has the Diplomat Beach Resort received?

2019 Best Family Resort by Travvy Awards, Top Resorts in Florida by Conde Nast Traveler in 2018, and the AAA Four Diamonds Award.