David Martin’s Terra
is offering half a billion dollars to buy out the Castle
Beach Club condominium building in Miami Beach, The Real
Deal has learned.
The offer comes months after condo giant Related Group and
13th Floor Investments withdrew their $500 million bid for
the 57-year-old property 5445 Collins Avenue.
Castle Beach Club, an 18-story, roughly 570-unit
condominium, has been on the market for more than a year
with a Colliers South Florida team led by Ken Krasnow and
Gerard Yetming. Nine firms bid on the property last year,
including a joint venture between Related and 13th Floor.
Terra was one of the firms, according to a source.
Terra did not respond to questions about the structure of
the proposed deal. The Coconut Grove-based development firm,
led by CEO Martin, declined to comment.
Many units are operated as short-term rentals, but some
owners live in the building. Crescent Heights converted the
building from a hotel into condos and sold the units in the
early 1990s, records show.
Terra is preparing contracts for individual unit owners,
which will be distributed within the next two weeks,
according to a letter sent to unit owners on Friday and
obtained by TRD. The unit owners would have roughly two
months to accept or reject the offers, the source said.
Yetming wrote in the letter that after “extensive
discussions” with Terra about its financing, the firm “has
the capability to complete this purchase and has the funding
in place to do so.”
“The economy and the financial markets have been badly
affected by recent interest rate increases,” Yetming wrote.
“As you will recall, these external factors were the primary
reason for the withdrawal of the previous investor group at
the end of last year.”
Castle Beach Club, built in 1966, has had a handful of
unsafe structure violations, records show. A group of
violations dating back to 2019 was resolved in October,
according to the city’s database.
Older buildings have been in the limelight in the months and
years following the Surfside condo collapse. Ninety-eight
people died when the oceanfront Champlain Towers South came
down overnight in June 2021. The building was next door to
Eighty Seven Park, a luxury condo developed by Terra and its
partners. Insurers for Eighty Seven Park’s general
contractor, the Terra-led entity that developed the project
and the condo association kicked in nearly $300 million to
the $1 billion-plus settlement tied to the collapse, without
admitting any responsibility.
The 4-acre Castle Beach Club site is zoned RM-3, which means
a 500,000-plus-square-foot project with nearly 600 units
could be built. The zoning allows for a 200-foot-tall
development, or about 20 stories. The property has 576 feet
of beach frontage.
Owners of units in older buildings may be more incentivized
to sell, as they face deadlines to comply with new statewide
condo safety legislation, financial reserve requirements,
increasing construction costs and insurance premiums. But
developers are more cautious now that the market has slowed
and financing has become more challenging to secure.
If Terra receives enough support to complete a bulk
purchase, it would then move to terminate the condo and
knock down the building to make way for a new project. One
recent example of this is Related and Two Roads’ bulk
purchase of the former Carlton Terrace in Bal Harbour, where
they are now in presales for the planned Rivage luxury condo
building.
Terra has ramped up across South Florida with dozens of
projects. In Miami Beach, they include Five Park, a luxury
condo tower it’s building with developer Russell Galbut at
the entrance to South Beach; a mixed-use development in
North Beach; and the planned Miami Beach Convention Center
Hotel.