Trinity and Credit Suisse Pay $835M for Diplomat Resort in South Florida
Seller Brookfield Properties listed the resort for $1B in 2019
By Julia Echikson February 2, 2023 6:18 pm
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Trinity Investments and Credit Suisse (CS) Asset Management have closed on the purchase of the Diplomat Beach Resort in Hollywood, Fla., capping a four-year saga for the seller, Brookfield (BN) Properties, according to sources familiar with the transaction.
The duo paid $835 million for the oceanfront resort, one of the largest hotel deals since the pandemic hit, the Wall Street Journal first reported.
The Diplomat is the second-largest hotel in South Florida, featuring 1,000 rooms and 200,000 square feet of meeting and event space. Brookfield Properties subsidiary Thayer Lodging Group purchased the 709,504-square-foot resort for $460 million in 2014, according to property records, and spent at least $90 million renovating it.
The sale is the largest hospitality deal in South Florida since Michael Dell’s investment firm MSD Partners bought Boca Raton Resort & Club for $875 million in 2019.
The deal was a long time coming for Brookfield. The Canadian asset manager put the 39-story hotel on the market in 2019, asking $1 billion. Jeffrey Soffer’s Fontainebleau Development and Koch Real Estate Investments were first under contract to buy it for about $800 million, but the deal fell apart in May 2020 due to the COVID-induced lockdowns.
In 2021, as the hospitality industry was recovering, Soffer and Koch Real Estate went back into contract for around $850 million, Commercial Observer reported. But Brookfield ultimately turned down the joint venture’s offer, in part because of Soffer’s desire to open a casino inside the resort, according to a source familiar with the negotiations. A casino was something of a pipe dream given Florida’s restrictive gambling laws and likely opposition from the powerful Seminole Tribe, which owns the nearby Hard Rock Hotel & Casino.
By early 2022, Trinity had entered the picture and was under contract for around $850 million, Commercial Observer first reported. Trinity and Credit Suisse likely assumed Brookfield’s debt, given recent interest rate hikes, according to sources with financing knowledge. The asset manager most recently secured a $168 million refinancing in 2019 from Morgan Stanley, JP Morgan and Wells Fargo, per property records.
The Diplomat deal is set close on Friday, said a spokesperson for the buyers, who declined to confirm the sale price.
While under contract, Trinity has been in discussion with local developers to expand the Diplomat to add condo units, said a source familiar with the talks. In 2019, the Broward County Commission gave preliminary approval to a land use proposal, which could result in an additional 500 rooms, 150,000 square feet of convention and meeting space, and 350 residential units, per TRD.
The Diplomat purchase marks Trinity’s second South Florida deal in recent years. The Honolulu-based investor, along with Certares Real Estate Management, bought the East Miami, a hotel within the Brickell City Centre complex, for $174 million in 2021.
Julia Echikson can be reached at juliaechikson@commercialobserver.com.
