European Beach House
721 Michigan Avenue, South Beach Flamingo Park Historic District
Neal R. Deputy
690 Lincoln Road
Miami Beach , FL 33139
Cell: (305) 467-4026
Fax: (305) 305-7592
OFFERING MEMORANDUM
A Licensed Hotel Complex in the Heart of South Beach
$2,499,000
Architect’s Rendition by Tony Leone Architect
CO
NTE
NTS
Existing Street Elevation
Cover
Contents
Introduction
Location & Environs Map
City Zoning Verification Letter
Ground Floor Plan
Second Floor Plan
Exterior Photographs
Interior Photographs
Weekly Rental Proforma
Comparable Hotel Sales
Hotel & Rooming House Codes
About South Beach
About Miami
Notes to Bidders
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02
03
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11
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18 02
CONTENTS
INTR
OD
UC
TION
03
Licensed Short Term Rental properties are exceedingly rare in the Art Deco Historic District of South Beach and The European Beach House provides extraordinary potential for a variety of enterprises. Built in 1921 in the Craftsman Bungalow style, this 7,000 square foot complex is comprised of eleven (11) Short Term Rental Units disposed around a central courtyard. The Main House at Street Front provides an entry porch, lobby, seven rental units (all with private baths) and upstairs common areas. The Courtyard Building to the rear of the site is contemporaneous and provides four units with private entries, private baths, and private gardens. See floor plans on following pages for room layouts and exterior features.
The European Beach House was originally converted to transient rental use in the 1940s to serve the lodging needs of America’s Armed Forces during WWII. Troops would train on the beaches by day and relax in the inviting tropical environs of this and other “Rooming Houses” by night. Known as “Anker House” in the 1940s, it became “Helen’s Apartments” for much of the 60s and 70s and was ultimately converted to The European Guest House in the 1980’s. Beamed ceilings, bay windows, porches, decks, terraces, and lush tropical landscape define and characterize this important historic landmark.
The Subject property has been in continuous operation since 1922 and is currently undergoing renovation and revitalization. The current owners are working in tandem with local professionals and the City of Miami Beach to ensure that all historic, building code, and licensing requirements are met. Asking prices for similar establishments in the Art Deco Historic District hit $650,000 per key (see Comparable Hotel Activity, page 14) making the price of the European Beach House at $227,000 per key a true value- a rarity in South Beach. Note that the “Roominghouse” designation for the subject property allows for remote management- free from the cumbersome demands of other short-term rental properties. Also, the ability to serve Food and Beverages to guests round-the-clock adds significantly to potential income and is a more liberal use than is allowed for either Hotels or Bed & Breakfast Inns in the District. Finally, commercial signage to advertise the establishment is allowable on site (up to 20 square feet) and no additional parking or impact fees are required of the new owner.
Stair to Courtyard Building B
INTRODUCTION
LOC
ATIO
N &
EN
VIR
ON
S M
AP
04
Sailing the Bay Lincoln Road Mall Fun in the Sun
Miami Beach Convention Center
Collins Avenue Shopping District
Alton Road Arts District World Famous Ocean Drive 5th Street to Miami
Flamingo
Park
Art Deco
Historic District
South Beach
Tennis?
European Beach House
Z
ON
ING
VER
IFICA
TION
LETTE
R
ZONING VERIFICATION LETTER
05
GR
OU
ND
FLO
OR
PLA
N
GROUND FLOOR PLAN
06
06
B-2
LOBBY
A-3
B2
A-2
A-4
B-1
A-1
ENTRY
Space for Private Outdoor Showers
and Gardens
Private Entry and Garden for Unit
B-2
Stair to Units B-3, B-4, and
Baloneys above
Courtyard Overlook above
Generous Courtyard with ample
room for a Swimming Pool
Stair to Common Areas above
Space for Private Outdoor Showers
and Gardens
Elegant Entry with Porch and
Lobby
Ample Lawn Area for Landscape
or other Features
Existing Curb cut with Drop-Off
and Delivery Space
Commercial Signage allowable
By-Right
All Units are provided with Private
Baths
SEC
ON
D F
LOO
R P
LAN
07
SECOND FLOOR PLAN
06
Private Porch for Unit B-4
Shared Porch Entry for Units B-3
and B-4
Stair to Units B-3, B-4, and
Balcony
Courtyard Overlook
Private Deck for Unit A-7
overlooking Courtyard
Common Area Lounge on Second
Floor
Most Units are Corner Located. All
Units have Private Baths
DECK
DEN A-7
A-5 A-6
BALCONY
B-3
B-4
Courtyard Below
EX
TER
IOR
PH
OTO
GR
AP
HS
European Beach House
from the Street
Courtyard between Buildings
A & B
Stair Leading to
Courtyard
Building B at
Rear of Site
09 08 08
E
XTE
RIO
R P
HO
TOG
RA
PH
S
Courtyard Building and Stair to
Balcony above
Apartment
Building at
Rear of
Property
Bathroom #3 Undergoing Repairs
View to Street
from Second Floor
Balcony
09
View of Main Building and
Courtyard from Building B Balcony
Courtyard view from Covered
Terrace outside Unit B1
Private Gardens at Rear
of Units B1 & B2
View of Courtyard Building B and
Courtyard
EX
TER
IOR
PH
OTO
GR
AP
HS
10
INTE
RIO
R H
OTO
GR
AP
HS
11
Enclosed Entry Porch
(Formerly Open)
Entry Lobby Leading to
Central Stair and
Adjoining Rooms
Beamed Ceiling and
Wood Paneled Doors in
Entry Lobby
INTE
RIO
R P
HO
TOG
RA
PH
S
12
Second Floor Lobby and Stair
Landing
Typical Room with A/C, Ceiling
Fan, Private Bath, and Tiled
Floors
Entire Facility is Protected by
Commercial Quality Fire Alarm
Equipment
European Beach House Short Term (Weekly) Rental Proforma
Income: Year #1 @ 65% Occupancy Expenses: Typ. Annual
UNIT # TYPE: WEEKLY ANNUAL ITEM: EXPENSE:
1 Single $999 $51,948 Property Taxes $38,000
2 Single $999 $51,948 Sales & Resort Tax Added
3 Single $999 $51,948 Insurance $12,000
4 Single $999 $51,948 Water/Sewer $5,400
5 Single $999 $51,948 Electric $3,600
6 Single $999 $51,948 Garbage $2,400
7 Single $999 $51,948 Landscape $2,400
Pest Control $1,200
8 Double $1,299 $67,548 Licenses $500
9 Double $1,299 $67,548 Fire Inspection $95
10 Double $1,299 $67,548 Property Mgmt $24,000
11 Double $1,299 $67,548 Maint. & Repairs $12,000
Advertising $18,000
Housekeeping $20,800
Unknowns (10%) $16,000
Total GPI: Weekly= $12,189 Annual= $633,828 Total Expenses= $156,395
Adjustments to GPI: Year 1 NOI @ 65% Occ= $382,359
Peak Week Premium 15% $95,074 Year 2 NOI @ 70% Occ= $414,050
Ancillary Services 5% $31,691 Year 3 NOI @ 75% Occ= $445,742
Occupancy Year #1 65% $411,988 Year 4 NOI @ 80% Occ= $477,433
Year 5 NOI @ 85% Occ= $509,124
Adjusted: Monthly= $44,896 Annual= $538,754 Cape Rate @ Year 1 = 12.75%
Cap Yr 1 Cap Yr 2 Cap Yr 3 Cap Yr 4 Cap Yr 5 Cap Rates reflect a total
12.75% 13.80% 14.86% 15.91% 18.18% investment of $3,000,000
WEEKLY RENTAL PROFORMA
WEEK
LY R
EN
TAL P
RO
FO
RM
A
13
Address Month Sale Price BLD'G SF Cost/ SF Units Cost/Unit Name
347 Washington ACTIVE $13,900,000 11,140 $1,248 24 $579,167 St. Augustine
1415 Collins ACTIVE $8,500,000 7,980 $1,065 17 $500,000 Villa Paradiso
1018 Jefferson ACTIVE $6,500,000 3,956 $1,643 10 $650,000 B&B Inn
354 Washington ACTIVE $6,800,000 5,916 $1,149 13 $523,077 Villa Italia
235 18th St ACTIVE $4,950,000 3,375 $1,467 12 $412,500 Boutique 18
825 Washington SOLD $28,500,000 32,662 $873 75 $380,000 Clinton Hotel
7450 Ocean Ter SOLD $29,250,000 53,102 $551 93 $314,516 Days Inn
1775 James SOLD $12,900,000 15,557 $829 46 $280,435 Hotel 18
1506 Collins SOLD $11,000,000 21,832 $504 30 $366,667 Eva Hotel
1120 Collins SOLD $15,475,000 30,954 $500 54 $286,574 Nash Hotel
TOTAL: $137,775,000 118,131 374
AVERAGE: $1,166 $368,382
REC
EN
T CO
MP
AR
AB
LE H
OTE
L SA
LES
12
14
COMPARABLE HOTEL ACTIVITY
HO
TEL &
RO
OM
ING
HO
USE C
OD
E
15
HOTEL & ROOMING HOUSE CODE
Miami Beach is a coastal resort city located
in Miami-Dade County, Florida.
Incorporated on March 26, 1915, it is
located on a series of natural and man-made
barrier islands between the Atlantic Ocean
and Biscayne Bay, the latter separates the
Beach from Miami city proper. The historic
neighborhood of South Beach, comprising
the southern- most 2.5 square miles of
Miami Beach, along with Downtown Miami
and the port, collectively form the
commercial center of South Florida. As of
the 2010 census, the city had a total
population of 87,779. Miami Beach has
remained one of America's pre-eminent
beach resorts for the past 100 years.
In 1979, Miami Beach's Art Deco Historic
District was listed on the National Register
of Historic Places. The Art Deco District is the
largest collection of Art Deco architecture in
the world comprising hotels, apartments
and other structures erected between 1923
and 1943. Mediterranean, Streamline
Moderne, and Art Deco are all represented
in the District. South Beach is bounded by
the Atlantic Ocean on the East, Lenox Court
on the West, 6th Street on the South and
Dade Boulevard along the Collins Canal to
the North. The movement to preserve the
Art Deco District's architectural heritage was
led by former interior designer Barbara
Capitman, who now has a street in the
District named in her honor.
Miami Beach has a tropical climate with hot
humid summers and warm dry winters.
Other than the Florida Keys, Miami Beach
has the warmest winter weather in the
United States (mainland). The warm and
sunny weather in Miami Beach and South
Florida attracts millions of travelers from
around the world from November through
April. Sea surface temperatures range from
75 F in winter to 86 F in the summer/fall
months. Miami Beach has the warmest
ocean surf in the United States annually.
Median Resident age in 33139: 38.9 yrs Median Resident Age in FL: 40.5 yrs Average household size in 33139: 1.7p Average household size in FL: 2.6p Average AGI in 2010 in 33139 $89,607 Average AGI in 2010 in FL $50,523 Average Wages filed in 33139: $52,304 Average Wages filed in FL: $39,563 33139 population in 2010: 32,255 33139 population 2000: 38,441 Houses and Condos: 36,412 Renter-occupied Apts: 16,452 % of Renters in 33139: 69% % of Renters in FL: 31%
March 2012 COL index : 117.2 Well above U.S. average: 100.0 Land area in square miles: 2.7 Water area in square miles: 3.3 RE property taxes for housing units in 2010 in 33139: (1.2%) $4,175
Florida: ( 1.0%) $1,882 Median RE property taxes paid for housing with mortgages in 2010: 5 (1.4%) $4,665 Median RE property taxes paid for housing with no mortgage in 2010: 5 5 (1.1%) $3,466
16
AB
OU
T SO
UTH
BEA
CH
ABOUT SOUTH BEACH
AB
OU
T MIA
MI
ABOUT MIAMI
Miami is a city located on the Atlantic coast in southeastern Florida and the county seat
of Miami-Dade County. The 42nd largest city proper in the United States, with a
population of 408,568, it is the principal, central, and most populous city of the Miami
metropolitan area, and the most populous metropolis in the Southeastern United States.
According to the U.S. Census Bureau, Miami's metro area is the seventh most populous
and fourth-largest urban area in the United States, with a population of around 5.5
million.
Miami is a major center and a leader in finance, commerce, culture, media,
entertainment, the arts, and international trade. In 2010, Miami was classified as a Alpha-
World City in the World Cities Study Group’s inventory. In 2010, Miami ranked seventh
in the United States in terms of finance, commerce, culture, entertainment, fashion,
education, and other sectors. It ranked thirty-third among global cities. In 2008, Forbes
magazine ranked Miami "America's Cleanest City", for its year-round good air quality,
vast green spaces, clean drinking water, clean streets and city-wide recycling programs.
According to a 2009 UBS study of 73 world cities, Miami was ranked as the richest city in
the United States, and the world's fifth-richest city in terms of purchasing power. Miami
is nicknamed the "Capital of Latin America", is the second-largest U.S. city (after El Paso,
Texas) with a Spanish-speaking majority, and the largest city with a Cuban-American
plurality.
Downtown Miami and South Florida are home to the largest concentration of
international banks in the United States, and is home to many large companies both
nationally and internationally. The Civic Center is a major center for hospitals, research
institutes, medical centers, and biotechnology industries. For more than two decades,
the Port of Miami, known as the "Cruise Capital of the World," has been the number one
cruise passenger port in the world, accommodating some of the world's largest cruise
ships and operations, and is currently the busiest in both passenger traffic and cruise
lines
Miami has a tropical monsoon climate with hot and humid summers and short, warm
winters, with a marked drier season in the winter. Its sea-level elevation, coastal location,
position just above the Tropic of Cancer, and proximity to the Gulf Stream shapes its
climate. The wet season begins sometime in May, ending in mid-October. During this
period, temperatures are in the mid 80s to low 70s. Much of the year's 55.9 inches (1,420
mm) of rainfall occurs during this period.
17
AB
OU
T MIA
MI
In conclusion, the subject property offers a rare and singular opportunity to own and
operate a highly desirable short term rental facility in the heart of South Beach-
America’s playground and the world’s entertainment mecca. Furthermore, additional
upside can be anticipated in the development of on-site amenities, food and beverage
operations, and the full range of services available in close proximity.
Real Estate deals in South Beach tend to fall into very low cap rate long term equity
plays. Further, available inventory is virtually nonexistent in the Art Deco District and
most deals currently being presented produce very low returns. 721 Michigan Avenue
provides a solid investment for the discerning investor, developer, or operator with
tremendous upside potential and long term value.
18
NO
TES TO
BID
DER
S
NOTES TO BIDDERS Please do not explore the premises without the Listing Agent. Viewings of the site and
interiors will be promptly arranged following receipt of an acceptable Letter of Intent.
This brochure is intended solely for informational purposes to assist in determining if one
wishes to proceed with further due diligence investigation of the property. The
information included herein has been obtained from sources deemed to be reliable but
no representations, guarantees, or warranties with respect to this information are being
made. Additionally, this information is subject to change at any time without notice to
recipients.
Risks are involved in any real estate purchase. It is the investor’s responsibility to
independently verify any data relied upon for an investment using qualified legal,
financial, and operations advisors. Projections, opinions, assumptions, or estimates used
in this memorandum are illustrative examples only. Prior to investing in real estate,
investors should also carefully consider possible tax consequences and legal
requirements.