The owners of The Ritz-Carlton Grand Cayman want to sell, and the hotel is likely to go to market in April.
The move by the property’s Connecticut-based owner Five Mile Capital is “an investment decision,” according to local broker Kim Lund, who said the management company had announced its intention to sell a couple of weeks ago.
“It’s going ahead,” he said, but “it’s still at the early stages. They are doing their due diligence, doing valuations, getting their pricing where they want it. There are a lot of moving parts to this.”
Five Mile Capital Partners, LLC, established in 2003, is a Stamford, Connecticut, alternative investment and asset management company specializing in real estate, private equity and structured finance. The company says it has nearly $1.8 billion under management.
Five Mile acquired the 136-acre Ritz-Carlton property, which includes the hotel, the nine-hole Blue Tip golf course and future development land, at auction on Oct. 31, 2012 for US$177.5 million.
It also acquired the unsold condominiums at the The Residences at The Ritz-Carlton.
At the time they acquired the property, Five Mile Capital said it would invest $25 million in the hotel with a view to selling it in the next five to 10 years.
“Five Mile’s significant capital investment is designed to elevate The Ritz-Carlton, Grand Cayman to a premier resort destination within the Caribbean and lead to substantial direct and indirect economic benefits to the Cayman Islands’ economy,” the company said in a formal statement at the time.
“Over the next several years, the plan would be to put additional capital into the asset to renovate the hotel.”
Local real estate broker J.C. Calhoun pointed out that the 356-room Ritz-Carlton recently completed a multimillion-dollar renovation of the top floor of The Ritz-Carlton Residences, which have between two and seven bedrooms and 9-foot ceilings in an area as large as 20,000 square feet, with prices starting at $3 million.
Last year, the hotel completed a three-year multimillion-dollar rebuild, reconfiguring the hotel’s fifth floor into meeting rooms, creating an interactive culinary studio, building the “Starfish Cay” splash park, expanding outdoor seating and opening a high-end retail shop – while announcing 2016 plans to start another $100 million in renovations on 100 suites and residences.
In February, U.S. News and World Report named the hotel the best in the Caribbean.
The Cayman Islands Central Planning Authority has already reviewed an application to change zoning on nearly 200 acres surrounding the hotel, allowing tourism development across the Esterley Tibbetts Highway and out to North Sound.
On Feb. 3, the Central Planning Authority received an application from Five Mile Capital’s RC Cayman Property Holdings Ltd. for a multimillion-dollar mangrove restoration project on nearly 15 acres on the North Sound.
Consultants from Florida’s Applied Technology and Management, led by Associate Principal Esteban Biondi, visited the site at least four times, developing a comprehensive redevelopment plan that includes boardwalks and a small building for educational purposes.
Finally, the company is developing plans for 80 residences in the low-density area between the hotel and North Sound, hoping, among other things, to reduce congestion in the crowded Seven Mile Beach waterfront.
Contacted at Five Mile Capital headquarters, officials declined to comment about the mangrove project. “We are unable to provide further commentary at this time. As soon as we have any completed news to share, we will gladly reach back out to you,” said spokeswoman Heidi Nowak.
Neither the Maryland-based Ritz-Carlton Hotel Company, LLC, nor its Maryland-based Marriott International owners would comment.
However, Ritz-Carlton Grand Cayman General Manager Marc Langevin said he had heard about the sale, although Five Mile Capital had not formally told him.
“We are just waiting to see what they want to do,” he said, adding that The Ritz-Carlton holds a long-term management contract for the hotel.
Any new owner, he said, “will have no say in that. The sale comes with the contract, and the Ritz has a very long-term contract. The only way it can be ended is for a breach of the terms or performance issues.”
He said the contract had passed from Ritz-Carlton developer Michael Ryan to Five Mile Capital in 2012 and the company “always expressed they were in here to make the hotel the best – which they did. We have a great partnership.
“So for us, it’s business as usual. This will have no impact on the hotel, the staff or the customers,” Mr. Langevin said. “The only thing it means is that people will be coming to tour and I’ll have to put on my ‘guide’ hat and show them around.”
Jeremy Hurst, International Realty Group president, owner and broker, confirmed the hotel is for sale, but declined to elaborate. “At this stage it would not be appropriate,” he said.
However, Mr. Hurst said, “It has always been my understanding that Five Mile Capital’s long-term strategy would be to acquire the asset, improve it through investment in its physical infrastructure as well as in its human capital and realize the resulting enhanced value via a structured sales process at the appropriate time.
“Certainly the timing for such a disposition could be ideal now with the Cayman market having fully recovered and in a bullish mode, thereby achieving optimum return on investment for its owners,” Mr. Hurst said.
One U.S. expert said Five Mile “has a certain window now, as part of its plan. They want to get these things in place so they can say they are there.
“It will go to market very, very soon, but [they] have not identified yet who they’ll work with. They are going to quietly approach people in the market they know.”
Mr. Lund pegged the price “anywhere from about $200 million to $500 million, and probably another hotel company will buy it.”
The Connecticut financiers, he said, “are not an operator. They are an investment company, and the key is to make money. They’ve done pretty well for about five years, and it’s time to move on.”