Delray Beach-based Ocean Properties Ltd., owner of the Longboat Key Hilton Beachfront Resort, announced Tuesday it’s formulating a joint venture with the Longboat Key Club and Resort and Loeb Partners Realty LLC for all of the resort’s assets.
If the joint-venture partnership is consummated after an unspecified due diligence period, Ocean Properties would become an equity partner in Key Club Associates, L.P., the entity that controls the Longboat Key Club.
Ocean Properties Vice President Andy Berger, Loeb Partners Realty Vice President Adam Tegge and Longboat Key Club and Resort General Manager Michael Welly met with the Longboat Observer Tuesday afternoon to announce the pending joint venture, which club officials are touting as the next step in a $400 million expansion-and-renovation plan that received town approval in June 2010.
Berger said there are no further details regarding its investment amount or the joint venture itself until the due diligence process has been completed.
A purchase and sale agreement for that equity stake has been drawn up, Berger and Tegge confirmed, and its signing is contingent upon the due diligence, which began Tuesday when Berger arrived on the Key to meet with club officials.
The due diligence period does not have a set timeline for completion and could last anywhere from 30 to 90 days, or longer.
Berger declined to comment when asked if the equity stake was a majority stake or a 50/50 stake in the resort.
What Berger did say was the Longboat Key Club and Resort “is one-of-a-kind here in Florida.”
“We operate more than 100 hotels, and these (types of resorts) don’t come available that often,” Berger said. “When we got the call, we were intrigued and went to work.”
Berger said his company’s plans for the club don’t affect a planned remodel of the Longboat Key Hilton, on which he hopes to commence construction by May 2013. Berger also said his company’s interest in the club as the managing partner includes plans for longtime manager Michael Welly.
How did it happen?
Tegge and Welly told the Longboat Observer the joint venture relationship was part of a process that officially began soon after the Longboat Key Town Commission approved the club’s expansion plan in 2010.
“We’ve always known we would need a developer for the project because that’s not what we do,” Welly said. “It just became a matter of time to reach out to developers.”
Tegge said the group engaged a brokerage firm in the first quarter of 2011 to look for investment partners for its project, although it appears the venture was formed with the help of a Key resident: Vice Mayor David Brenner.
Brenner was a Planning and Zoning Board member when he forged a relationship with Berger in 2006. The town was working to acquire an additional pool of 250 tourism units that Berger expressed an interest in for the Hilton at that time.
“Andy Berger and the Walsh family (owners of Ocean Properties) are really enamored with the Key, and we have had discussions about its redevelopment,” Brenner said.
Brenner said the discussions led him to keep Berger and Mark Walsh, an Ocean Properties executive and the son of company founder Tom Walsh, in touch with Key Club attorney John Patterson. Patterson told the Longboat Observer he immediately hit it off with Walsh in March when they discussed their love of March Madness college basketball. The relationship turned into a business one when Ocean Properties hired Patterson as its attorney for the renovation of the Longboat Key Hilton.
Patterson said once Loeb Partners realized he had a relationship with Ocean Properties officials, he was given permission to discuss the club’s expansion plan and its intent to find an investment partner.
“Loeb told me I could tell them (Ocean Properties) everything and anything,” Patterson said. “One thing led to another, and it all just sort of came together.” Patterson, though, maintains his part in the budding venture relationship was “minimal at best.”
Patterson said Loeb Partners Realty had discussions with at least 20 other potential development partners before entering into discussions with Ocean Properties.
“All we heard was, ‘We’re interested, but call us when you’re done with your litigation,’” Patterson said. “The litigation is not a problem for Ocean Properties, and they’re confident the club will get it (the expansion project go-ahead on the legal level) eventually.”
Once discussions ensued with Ocean Properties two months ago, the joint venture details were formed quickly.
Now, over the next several weeks, Berger and Ocean Properties executives will comb the property and its assets before finalizing the partnership.
“They will get a better take on what this property is all about before we go any further,” Tegge said.
Tegge said Ocean Properties, a longtime manager and developer of hotels over its more than 30 years in operation, “has the development expertise needed, which became a primary focus for seeking a new partner.”
Asked about some of the criticism that’s arisen from some Longboaters that the expansion plan was only done to sweeten the pot for a potential sale of the club, Tegge said, “It’s never been about putting the property up for sale.”
Bob White, chairman of the Islandside Property Owners Coalition, called the announcement “a surprise.”
“Given the unresolved legal issues, I’m surprised they are doing this,” White said. “But, we have known for some time they would either sell the property or bring in an investment partner.”
When the joint venture relationship is approved, it includes any and all approvals for the project that the town made in 2010, pending the two legal challenges still outstanding on the project’s outline development plan amendments.
Mayor Jim Brown, an architect who spent his career designing and building hotels, said he had reservations about the club’s project moving forward with a hotel operating manager that was based out of New York.
“It appears we may get a hotel company that’s already very involved in this community,” Brown said. “It sounds to me as though this could be a very positive thing for the project moving forward.”
Ocean Properties also owns the Lido Beach Holiday Inn and the Lido Beach Resort.
Ocean Properties, Ltd. & Affiliates
Ocean Properties, Ltd & Affiliates (OPL) was started in the 1969 by Thomas Walsh. It is currently one of the largest privately held hotel-operating and -development groups with 107 hotels throughout the U.S., Canada and the Caribbean. OPL has management offices in Delray Beach and Portsmouth, N.H. It operates major brands such as the Marriott and Hilton, as well as independent hotels and resorts. More than 30 OPL hotels are located in Florida:
• Banana Bay Resort & Marina
• Country Inn & Suites by Carlson
• Courtyard by Marriott Boynton Beach
• Courtyard by Marriott Coral Springs
• Courtyard Hutchinson Island /Jensen Beach
• Courtyard Key Largo
• Courtyard Naples
• Courtyard Orlando Lake Buena Vista
• Hampton Inn Vero Beach Hotel
• Hilton Deerfield Beach/ Boca Raton
• Hilton Longboat Key*
• Holiday Inn Express Boca Raton
• Holiday Inn Highland Beach
• Holiday Inn Lido Beach
• Holiday Inn Port St. Lucie
• Holiday Inn Resort & Marina Key Largo
• Holiday Inn Vero Beach Oceanside
• Hotel Indigo Miami – Dadeland
• Hotel Urbano Miami
• Jupiter Beach Resort & Spa
• Key West Travelodge
• Lido Beach Resort
• Marina Del Mar Resort & Marina
• Marriott Delray Beach
• Marriott Hollywood Beach
• Marriott Key Largo Bay Beach Resort
• Residence Inn by Marriott St. Petersburg/ Treasure Island Beach
• Residence Inn Delray Beach
• Sandpearl Resort Clearwater Beach
• Sheraton Suites Key West
• Spring Hill Suites Tampa Westshore Airport
• The Breakers on the Ocean
• Weatherstation Inn Key West
• Boston’s on the Beach Delray
• Key West Express
Update: The Delray Beach-based Ocean Properties Ltd. closed on the purchase of the Longboat Key Club and Resort from Loeb Partners Realty, in New York on Nov. 1. The resort’s land and buildings sold for $32 million.