Diplomat Beach Resort Locks In $575M Refinancing
The Diplomat Beach Resort in Hollywood, Florida, is set to land a $575M refinancing package two years after Trinity Real Estate Investments and Credit Suisse Asset Management purchased the property in the third-largest single-asset hospitality sale in U.S. history.
The resort’s owners are expected to close next week on a $452M first-lien mortgage co-originated by Citi Real Estate Funding and German American Capital Corp., according to a Kroll Bond Rating Agency report.
A $123M mezzanine loan from TD Miami Beach Mezz LLC and PPIB Credit Investments III Inc. is expected to also be in place when the refinancing closes. The owners are slated to contribute $48M in cash equity.
The senior loan is expected to have a floating rate and a two-year term with three year-long extension options. Monthly payments will be interest-only, with KeyBank National Association acting as the servicer.
The debt covers the 1,000-key Diplomat Beach Resort at 3555 S. Ocean Drive, a property with twin 33-story towers, 128K SF of meeting space and eight food and beverage offerings. The resort first opened in 1958, but the current buildings were constructed in 2002 and underwent a $90M renovation between 2015 and 2018.
Trinity and Credit Suisse paid $835M last February to acquire the property from Brookfield Asset Management in a deal that saw the resort rebranded under Hilton’s Curio Collection. The joint venture assumed $466M in CMBS debt and $100M in mezzanine debt as part of the acquisition that will be replaced by this new financing.
In the 12 months ending in April, the hotel had a 70.6% occupancy and an average daily rate of $324.11, giving the resort $228.73 in revenue per available room, Kroll reported. Miami hotels had an average RevPAR of $237.25 in March, the highest in the country's top 25 markets, according to STR.
The owners are expected to embark on $36M in further renovations to put the property under Signia by Hilton brand, according to Kroll. The upgrades are slated to be finished by February 2026 and include upgrades to amenities and the repositioning of the resort’s restaurants.
The debt is packaged as a single-borrower CMBS loan named HLTN 2024-DPLO. Kroll gave the $185M in Class-A shares a AAA rating while Class-D notes, accounting for $89M of the debt, have the lowest rating in the stack at BBB-.
Honolulu-based Trinity and Credit Suisse have sold off two development parcels around the Diplomat that it picked up in the 2023 sale.
Miami-based developers Related Group and BH Group bought both sites, starting with the $30M August purchase of a development site next to Diplomat Landing, a mixed-use complex that includes a condo tower, two parking garages and a retail component across the street from the main resort, The Real Deal reported. The developers are planning a 38-story tower with 350 condos on the now-vacant site.
The same joint venture paid $21.5M in December for a second 5-acre development site at 3451 S. Ocean Drive, adjacent to the resort, where they’re planning a 52-story condo-hotel with 500 units and Hilton branding.
Trinity and its partner, New York-based Certares Management, also locked in $185M in refinancing this month from Deutsche Bank and KSL Capital Partners for the 40-story East Hotel in Brickell.
