Gulfstream Hotel: Historic Lake Worth Beach property is on track to sell in October

The Gulfstream Hotel and vacant land next to it could be sold to a firm specializing in historic restoration, marking the latest twist in the saga of the downtown Lake Worth Beach property.

After three years of on-again, off-again efforts, Restoration St. Louis is close to finalizing a contract to buy 100% of the membership interest in Gulfstream Owner LLC, an entity awarded rights to restore and expand the shuttered Lake Avenue hotel, said Jeff Perlman, executive vice president of CDS International Holdings, which owns the hotel and the land.

The sale is expected to close in mid-October, said Amrit Gill, president of Restoration St. Louis. Renovation of the historic hotel could begin by Nov. 1, he added.

In 2020, CDS had originally planned to sell the hotel property to Restoration St. Louis, a husband-and-wife team of developers from St. Louis who wanted to renovate and restore the historic building.

But the coronavirus pandemic killed off construction financing for the project. A joint venture between CDS and Restoration St. Louis then was proposed in 2021, but the hotel redo still hasn’t taken place.

Now both CDS and Restoration St. Louis say they’re back to a sale, albeit of ownership in the company that was awarded city entitlements to redo the hotel.

The deal not only includes the hotel but also six land parcels next door for an additional 50 hotel rooms, plus 85 apartments and a parking garage in an eight-story building.

The pending sale comes amid reports that CDS in recent weeks quietly had been marketing the hotel, and the next-door land, for sale to outside buyers, according to two real-estate sources who asked not to be named. One source familiar with the proposal said the offering included the hotel as well as the six adjacent parcels, described as suitable for multifamily housing.

A sale of all or part of the Gulfstream Hotel project?

In a July 18 interview, CDS executive Perlman said the company was working to sell the hotel to Restoration St. Louis but planned to hold back the apartment site and sell it separately.

The next day, Perlman corrected himself to say both the hotel and the adjacent sites were in the works to be sold to Restoration St. Louis through the sale of all ownership in the company awarded entitlements by the city.

The properties are not for sale to anyone else, Perlman said.

Restoration St. Louis president Gill said the company is intent on buying both the hotel and the vacant land to the west of it. “We have a purchase and sales agreement,” Gill said.

More: Gulfstream Hotel renovation is a go: Tense back-and-forth meeting finalizes $104 million deal

That’s not quite right, according to Perlman.

The sale agreement isn’t yet fully executed and still is being negotiated, he said. “We’re down to a few minor issues that we’re hoping to work out,” Perlman said.

If the project were transferred to an owner other than Gulfstream Owner, LLC, the approved agreement would have to come back before the city commission for review, according to an email from Lauren Bennett, director of the leisure services department in the city of Lake Worth Beach.

Proposed sale is latest bid to reopen historic Lake Worth Beach hotel

The Gulfstream’s confusing status is the latest twist in a seemingly endless effort to reopen the hotel, which closed its doors in 2005.

Through the years, various owners have proposed and failed to launch a renovation of the hotel, which opened in 1924 and was added to the National Register of Historic Places in 1983. When the Gulfstream closed 18 years ago, it marked a blow to the seaside city's downtown district.

The Gulfstream is considered the only viable hotel option for tourists to downtown Lake Worth Beach and potentially is a major economic boost to nearby businesses. The Lake Avenue hotel is across from the Intracoastal Waterway and Bryant Park.

In 2014, a group that includes vitamin kingpin Carl DeSantis paid $7.2 million for the hotel.

After a messy partnership dispute and lawsuit, solid plans finally began to take shape in August 2019 when Restoration St. Louis became involved in the venture.

Perlman said CDS found Restoration St. Louis after a wide-ranging search for a company skilled in historic preservation. Restoration St. Louis has renovated more than 400 historic properties, primarily in the Midwest.

In 2020, the Gills said they planned to buy the property from CDS.

But then the coronavirus pandemic dried up construction financing, and the Gills never completed the purchase.

Instead, in March 2021, Restoration St. Louis and CDS Holdings announced they were entering into a joint venture agreement to reopen the hotel by 2023, with CDS providing the construction financing.

Incentives from the city sweetened Gulfstream Hotel project

Also in 2021, the Lake Worth Beach city commission approved a letter of understanding that includes $1 million in infrastructure improvements and a 10-year tax abatement on the historic hotel, an economic incentive package believed by some to be worth in excess of $10 million.

To make the deal financially feasible, Restoration St. Louis said an expansion of the hotel was necessary.

This led to city approval of a 165,000-square-foot annex that would be built on the six parcels west of the hotel and feature the apartments, the added hotel rooms and the parking garage. The annex also would include a restaurant, rooftop pool, banquet room, salon and gym, Bennett said in the email.

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Last summer, the city commission approved the economic incentives for the developer, and everything seemed like a go.

The plan called for construction to start no later than June 30, 2023, with completion needed within 30 months.

But despite all the deal sweeteners, including the tax incentives and approval of the hotel addition, that deadline has come and gone.

Gill said the city has extended the deadline until Dec. 31.

Bennett confirmed the deadline has been extended by the Lake Worth Beach city manager.

Gill said he hopes to submit plans to the city in about eight weeks so construction can start by Nov. 1. He also wants to finish the historic hotel redo earlier than 2025, while the rest of the site is being completed.

Bennett said the proposed hotel restoration is expected to take between 12 to 18 months, with the addition slated to take up to another 18 months.

Gill said the lending environment has continued to be difficult, necessitating him to tap his own net worth to swing the deal. The entire project is expected to cost $135 million, up from about $100 million previously calculated, he said.

Gill added that the historic restoration alone will cost $45 million to $50 million, with the remaining costs slated for the rest of the project.

Although Gill said he had all his financing in place. He also said he was working to obtain $11 million in state money available to developers who build to “green” building standards.

Alexandra Clough is a business writer and columnist at the Palm Beach Post. You can reach her at aclough@pbpost.com. Twitter: @acloughpbp. Help support our journalism. Subscribe today.

This article originally appeared on Palm Beach Post: Restoration St. Louis to buy Gulfstream Hotel in Lake Worth Beach