Henley Investments Picks Up Miami Beach Hotel

Lord Balfour Hotel. Image courtesy of Life House

Private equity firm Henley Investments has acquired its fourth boutique hotel in metro Miami with the purchase of Lord Balfour Hotel for $34.7 million. The deal is reportedly Henley’s largest U.S. hotel acquisition to date.

Life House, a company that frequently collaborates with Henley, will manage the asset. The total project capitalization, including acquisition and renovation costs, is in excess of $40 million, Life House’s vice president of acquisitions and business development, Bryan Dunn, told Commercial Property Executive.

The 81-key hotel is located at 350 Ocean Drive in Miami Beach’s South of Fifth neighborhood. Life House will initially operate the hotel under its historic name, but plans to undertake a comprehensive renovation that will update all guest rooms, suites and public spaces, as well as build out a fitness center and yoga studio.

Following renovations, the hotel will be rebranded as Life House Ocean Drive and will join Henley’s current roster of lifestyle hotels in Miami: the 33-key Life House Little Havana on 9th Avenue, the 26-key Life House South Beach on Collins Avenue and the 50-key Life House Mid Beach on Park Avenue.

Market moves

Last month, Life House received $100 million in equity commitments from 
Boston-based Blue Flag Partners which was anticipated to enable Life House to acquire between 7 and 10 hotels. Life House had recently taken over management of The Roberts Collection, an historic 58-room hotel in Nantucket, Mass., which Blue Flag had purchased in April.

Last year, the Miami hospitality market saw a 2 percent increase in supply, but this was offset by a 2.5 percent increase in demand, as metro-wide ADR rose by 2.4 percent, according to a report from HVS. Average occupancy for the year was 76.7 percent, barely above the figure for 2017, but RevPAR rose at a nearly nation-leading pace.

Still, HVS cautioned, first-quarter 2019 results point to some softening of RevPAR, though Miami Beach is one of the few submarkets to see this metric increase, mostly driven by ADR growth.