Royal Palm Owners Squabble

The fight over ownership of Miami Beach's Royal Palm hotel escalated last week when original developer and now minority owner R. Donahue Peebles filed a Chapter 11 petition to put the entire ownership structure into bankruptcy. The filing was meant to stave off a foreclosure sale by Carbon Capital, which holds a $30-million loan on the 417-room property.

In an interview Friday at his Coral Gables mansion, Peebles said he made the bankruptcy move to protect his interest in the Royal Palm--and to protect the hotel itself. In a sense, he considers the Royal Palm his baby.

When he sold it for $128 million (the Miami Herald said it was $124 million, which Peebles corrected) to Guy Mitchell and Robert Falor in 2005, they were short $11 million and he got 12 percent of the hotel. "They made such a mess of the hotel, they ended up in various defaults with lenders and on Monday (Jan. 5), Mitchell tendered his ownership interest in the hotel to the lender without consulting us," Peebles says.

"In order to protect our interest in the property, we exercised some of our remedies and put the hotel ownership entity (Royal Palm Senior Investors) into bankruptcy," Peebles said. The Royal Palm is overleveraged on debt and the "managers of the partnership have not run the property or the business well; we are looking for the bankruptcy process to allow us to turn things around and hopefully take some control and pay some of the unsecured creditors back.

"We worked real hard to build that hotel. We made a lot of money selling it (it cost $80 million to build and it sold for $128 million)," he concedes, "but that hotel stood for something." Not only did it represent a breakthrough for African-American developers like Peebles, it contributed to the revitalization of South Beach."

"We're not going to sit back and see it run into the ground and become just a feeding frenzy," Peebles says. "It's about my concern for what the hotel stands for. And also I want to protect the jobs for the employees there." In this economic climate, who knows? Peebles, a consummate opportunist, might be interested in buying it back. As he noted, Kirk Kerkorian sold the MGM Grand three times.

Reprints and Licensing
© 2014 Penton Media Inc.

Acceptable Use Policy
blog comments powered by Disqus

Most Recent

More Recent Articles

Career Center

Quick Job Search
Enter Keyword(s):
Enter a City:

Select a State:

Select a Category:
Franchise Fact File Top Brands
Brand Company Basics Top Management Companies
Owners & Operators Industry Consultants
Industry Associations Industry Events
Design Firms Purchasing Companies
Top Ownership Groups

Click here to view all of the Lodging Hospitality Photo Galleries

Accor Best Western
Carlson Rezidor Choice
Hilton Hyatt
IHG La Quinta
Marriott Starwood
Vantage Wyndham

Free Product Information
News and Trends for the Hotel, Motel, and Hospitality Markets.

Lodging Hospitality eReport
Lodging Hospitality electronic newsletters are FREE to requested subscribers.

Lodging Hospitality Resource Center
The Lodging Hospitality Resource Center is the ultimate resource to find products and services to build, equip, and renovate hotels, motels and resorts.

Subscribe / Renew
Visit our subscription center to subscribe or renew your subscription to Lodging Hospitality.

Visit our webinars page to view all our upcoming and on demand webinars.

Visit our White Papers page to view all our current White Papers.