Loeb vs. Loeb
AL GREEN
Contributing Columnist
green@lbknews.com
The Shannon Corporation, the forerunner of the Loeb Realty Group, paid Arvida $26 million for the two golf clubs and the right to operate the Islandside hotel, the Inn on the Beach.
The clubs were valued by two separate independent consulting firms at $14 million for the two. These figures were told to me personally by Jim Owens, the director of golf at the time, and Bill Vernon, the owner of the Moorings. Both men were attempting to bid on the golf courses. Therefore it is reasonable to assume that Shannon paid at least $10 million, possibly as much as $12 million, for the right to manage the hotel and its units.
For whatever reasons, the selling price on the record was $11 million for each club and $4 million for the Inn on the Beach. However, when I asked Shane Eagan how they arrived at this breakdown, he told me that was the way Arvida wanted it.
These long-ago specifics are not important or relevant to today’s discussion except to point out that managing the hotel was considered a profitable enterprise and was from the beginning. For clarification for the old timers, the name of the hotel was changed. It is now called The Resort at Longboat Key.
That is why the potential construction of a new additional hotel nearby is a cause of some wonderment. The current arrangement gives Loeb a 50 percent share in all room rents at the resort. Since the units are owned individually by investors who pay the maintenance, the taxes, the insurance and the upkeep of their interior space, it is a very good deal for Loeb Realty. It is an exceptionally good deal when the usual split is 60/40 in favor of the unit owners.
If Loeb builds and operates the new hotel, what is going to be their policy vis-à-vis room rates? If they have a single reservation operation, how will room requests be handled? This can get tricky. I had a friend who was a 50 percent partner with Henri Soule in Cote Basque while Soule had a 100 percent stake in Le Pavillion, a very similar type of restaurant just around the corner. When he caught Soule filling up Le Pavillion before booking La Cote Basque, the partnership came to a swift ending. It is a touchy subject, and if Loeb builds and owns the other hotel, they will be in conflict not only with the resort owners but also with themselves.
If the hotel is either owned or managed by a separate entity, then Loeb will have been responsible for creating a major competitor. Who will determine the room rates? Which is going to be the costlier? The opposition to the total project has come primarily from IPOC, a group comprised of owners of the condos in the L’Ambiance, Sanctuary, Pierre, et al. They are fighting because they feel they will be harmed but indirectly. Owners of the resort on the other hand will suffer financially in a very direct way. Since Loeb is their 50 percent partner, any financial harm that comes to the owners falls as well on Loeb Realty. In short, this new hotel is not going to be all gravy for Loeb and could cause more hard feelings and other problems down the line.
A subplot to all of this is how and where do the guests of this new hotel go to the beach? Michael Welly told someone that guests of the new hotel will not want to go, because they will have a pool. Maybe I missed it, but I haven’t seen one hotel operator from the Gulf Coast on television saying he or she didn’t need recompense from BP from the oil spill because their guests didn’t need a beach, they had a pool.
So far, there has been no discussion with the owners of the resort as to access. There really is no other way for anyone staying at the new hotel to get to the beach except to walk though the lobby, through the pool area onto the beach. Even this is not terribly desirable and possibly not even legal. There is an easement used by Country Club Shores north of the Privateer, but it would be difficult to imagine it being the solution.
If one wants to go back through the minutes of all the meetings between the club and the town, you can sense a great reluctance on the part of Loeb and their counsel to push the hotel concept to the front of the line. I think the hotel was originally a throw in and only became a focal point when it became apparent that the hotel was really what was driving the P&Z Board and the Town Commission. I expect when it gets closer to submitting site plans, you are going to hear a lot about the difficultly of getting financing for a hotel and a suggestion that maybe they could talk first about the villas and condos.
Real estate needs to make a sizeable turnaround on Longboat Key, and nothing hurts real estate more than uncertainty. There are a lot of unanswered questions, and it is going to take years before we know the answers. The future hotel and how it fits in is just one.
