News for the Hospitality Executive
|By Ina Paiva Cordle, The Miami Herald
Knight Ridder/Tribune Business News
Feb. 11, 2004 - The Roney Palace hotel and condominiums had a strong 2003, but the partnership that operates it has landed in bankruptcy court.
That's because the investors can't agree on how to pay for renovations for the Miami Beach oceanfront property or even on its future direction.
The Roney Palace, which occupies the entire block between 23rd and 24th streets on Collins Avenue, will continue business as normal as the partnership reorganizes under Chapter 11, said Berger Singerman attorney Paul Singerman. He represents the partnership, Roney Associates, and two affiliated corporations that also filed for bankruptcy protection.
The Roney is controlled by 11 corporate partners, with the majority interest held by two Canadian groups and three sets of Italian investors. The bankruptcy was forced by upcoming financing needs and a $3.8 million interest payment due Tuesday.
The partnership filed for bankruptcy "to avoid any negative impact on the operations of the hotel and the condominium sales and guest satisfaction that could result," Singerman said.
Within bankruptcy court, the partnership hopes to reach an agreement, to come up with a recapitalization plan or, if necessary, put the property up for sale.
The oceanfront project has undergone at least $25 million in renovations since its condominium conversion began in 1997 and has millions more to go.
Yet the Roney has not suffered from a poor operating performance, Singerman said. Nor has it been a victim of the downturn in the travel industry, he said.
"We have a great asset, solid operations, terrific piece of ground and no operational problems," Singerman said.
2003 was the best year in recent history, and the Roney produced more than $1 million in operating profit, said William Mueller, chief executive for Roney Associates.
The 585-room hotel, which has averaged 70 percent occupancy for the past year, is currently at 95 percent occupancy and is sold out for next weekend. Its average room rate is $145.
And all but three of 578 condominiums have been sold, with about another 20 sales pending, for an overall average price of $350,000, Mueller said. The property also includes retail and commercial space.
But the Roney still has to complete a multimillion-dollar concrete restoration project and other repairs, Mueller said.
And the principal partners were in dispute as to future funding and the direction of the property for the future, said Francis Carter, an attorney for Ferrell Schultz representing three corporations owned by Italian investors that have equity interests and are creditors of Roney Associates. The investors have been involved since the 1980s and have invested "substantial monies," he said.
The Roney's history dates back to 1925, when the initial, landmark 17-story hotel with its Florentine bell tower and copper dome was built. During World War II, the hotel was used for housing and training Army officers.
Johnny Weismuller, the first movie Tarzan, worked as a cabana boy at the Roney. Florence Chadwick, who swam the English Channel, was once the hotel's aquatic director.
In 1968, the original Roney was demolished and replaced with a modern 1,162-apartment building.
In 1980, the building was sold by Frankel Brothers Construction Co. of Philadelphia to Roney Associates. The consortium operated the Roney as a rental building until 1997, when the conversion began to condominiums.
Today, the building is split between the Roney Palace Hotel and Beach Resort and the Roney Palace Oceanfront Condominium. The property includes two grand ballrooms, two oceanfront swimming pools and a 10,000-square-foot health club.
"This process, to our customers, the public and our guests, will be invisible," Singerman said. "We're optimistic that the filing will bring people together."
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(c) 2004, The Miami Herald. Distributed by Knight Ridder/Tribune Business News.