July 12, 2011--The former five-star Grand Bay hotel that has spend the last three years empty and moldering is in new hands.

Terra Grove Communities, an affiliate of condo developer Terra Group, has paid $24 million for the iconic Coconut Grove property. The seller was an affiliate of Spanish bank Novacaixagalicia, which took the property at 2669 S. Bayshore Dr. over in March after a long foreclosure fight.

David Martin, COO of Terra Grove Communities, said the company is evaluating its options for now but plans to hold on to the site for the long term.

"The Coconut Grove submarket is very viable," he said. "We're studying hospitality uses, we're studying residential uses."

Martin said the company is also studying whether the existing structure can be salvaged.

In its prime, the Grand Bay hosted celebrities including Michael Jackson and Pavarotti. Nightclub queen Regine opened a disco and supper club on the top floor. When it won a coveted five-star rating from Mobil in 1987, it was the first Miami hotel to do so.

Over the years, it joined the Wyndham portfolio and eventually was downgraded to a three-star hotel. In 2005, the Merco Group bought the property for $25 million with plans for a $20 million renovation. But after the doors closed in April 2008 for that project, construction funding dried up. Merco and the bank that lent the money battled in court as the hotel fell further into disrepair.

In March, the bank took the property in a deed in lieu of foreclosure.

Terra Grove Communities also bought a neighboring property in May that once housed office space for $3.4 million. Parent Terra Group has developed several condominium buildings over the last several years, including 900 Biscayne Bay, Metropolis at Dadeland and Nautica Condominiums in Miami Beach.

"We hope to do something that the community's going to love and be proud of," Martin said of the Grove venture. "We really look forward to developing something first-class."

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