Ritz Carlton in Palm Beach Gardens hits major landmark with private equity loan

The Ritz-Carlton Residences Palm Beach Gardens just closed a whopping $340 million construction loan, a major milestone for the luxury condominium being built on 11 acres along the Intracoastal Waterway.

Builder Dan Catalfumo said the loan from Madison Realty Capital is an important achievement for the project, which features 106 condos in three buildings just south of PGA Boulevard in Palm Beach Gardens. The loan is a major reassurance to potential buyers who were waiting to see if the project would obtain financing.

"Some people waited to have a construction loan and we’re dealing with very sophisticated people," Catalfumo said.

Nailing down the loan tells buyers that the project "is really going to happen, without a doubt," Catalfumo added.

And by seeking the construction loan from a private equity firm, Catalfumo said he's avoiding potential funding problems that could happen if the loan were made from a bank.

With the banking industry in recent turmoil, Catalfumo said he decided not to risk it.

"We've all been around during the last couple of recessions, when banks would stop funding in the middle of construction," Catalfumo said. "And then to finish it out you had to do it out of pocket or get a different lender. Or (the bank) sells your loan to a third party like a pension fund, and they'd say, 'We don't do construction. We'll get back to you in six months.'"

The size of the private equity investment also speaks to ongoing interest and confidence in Palm Beach County development. It shows real estate investors and financiers remain bullish on the county's growth projections.

More: Putting on the sales blitz: Ritz Residences in Palm Beach Gardens find eager buyers

More: Ritz-Carlton Residences project in Palm Beach Gardens to start sales in New Year

More: Builder Catalfumo returns with big plans for Palm Beach Gardens

Sales volume drew attention of New York firm that already is a player in West Palm Beach development

Madison Realty is no stranger to luxury projects in South Florida.

The New York-based real estate private equity firm recently provided a $55.1 million loan to Savanna Fund for the Olara Residences, a luxury waterfront condominium tower in West Palm Beach. In addition, Madison Realty made an $85 million loan to The Related Group, BH Group, Teddy Sagi’s Globe Invest, and Wanxiang Group Corporation for a luxury condominium project on Fisher Island in Miami Beach.

In a statement, Josh Zegen, managing principal and co-founder of Madison Realty Capital, cited quick sales at the Ritz-Carlton in Palm Beach Gardens as a driver of the company's interest in making the massive loan. Fewer than three months after opening its sales office on Feb. 16, the Ritz-Carlton condominium has clocked in about $85 million in preconstruction sales contracts.

This means nearly 20% of the project's 106 units are spoken for, Catalfumo said.

Units at the Ritz-Carlton Palm Beach Gardens start at $4 million and go up to nearly $9 million for one of 16 penthouse units. Five of those penthouses are pre-sold, Catalfumo said.

But with the end of the winter sales season, Catalfumo acknowledged that sales overall are slowing.

"We're definitely getting into the summer season," he said.

Construction moving quickly on former site of Panama Hattie’s

Catalfumo said his company already is prepping land along the Intracoastal Waterway, where the three seven-story towers will be built on more than 11 acres that formerly was home to Panama Hattie’s Seafood House and Rum Bar.

Construction of the adjacent marina is well underway. The seawall is in, and the pilings for boats, lifts and docks are going in at the end of May, Catalfumo said. By September or October, plans are to start work on the condo site itself.

The project's completion is slated for the fourth quarter of 2025.

What's it like to live at a Ritz-Carlton residence?

These Ritz-Carlton Residences are not hotels.

Instead, they are Ritz-branded residences, where the company manages the property under its banner with the level of service typically found in a Ritz hotel. But this property will be different from other condominiums because it fits into Ritz’s “estate collection,” a larger and more private level of residence.

Residents of a Ritz residence pay more in monthly condo fees for this 24/7 attention than at a typical condominium, but they receive the type of service that hotel guests expect when they arrive at a Ritz property. This includes pool attendants, valet staffers, concierge personnel and the legendary attention that includes employees knowing residents by name.

Amenities at the Ritz-Carlton Palm Beach Gardens include an infinity-edge pool, spa, fitness center, waterfront clubhouse and lounge. In addition, an on-site concierge who can help with restaurant or tee-time reservations, pet services, personal shopping and spa and salon appointments also is a mainstay of the service.

The three-, four- and five-bedroom units have private elevators, built-in bars and wine cabinets, two dishwashers, two refrigerators, a private park on the Intracoastal and more than three parking spaces per unit.

More: Suburban secret: Palm Beach Gardens's growing business and residential hub

More: Evolution of Palm Beach Gardens started with amenities for wealthy residents

Catalfumo is a longtime Palm Beach County builder

Some 15 years ago, Catalfumo was all over the county, building schools, government buildings, residences and office complexes.

In West Palm Beach, he built city hall.

In Palm Beach Gardens, he built the former Wackenhut World Headquarters at the southeast corner of PGA Boulevard and Interstate 95.

And on Singer Island in Riviera Beach, he built the 2700 N. Ocean condominium, now a Ritz-Carlton condominium.

After exiting the county's real estate industry for a time, he jumped back into the business a couple of years ago, creating plans for PGA Station, a massive office, residential and retail complex at PGA Boulevard and Interstate 95.

Catalfumo has sold the office portion to an affiliate of Gatsby Enterprises, which owns the nearby DiVosta Towers.

He then sold a site to Richman Group for 396 apartments.

Now he's in the midst of seeking approval for Richman Group to build another 600 units, for a total of 1,000 rental apartments at the site. About 100 of those apartments will be set aside for workforce housing.

With two big projects afoot, Catalfumo said his only major concern is if a major tropical storm descends on the area this summer.

But he said he's trying to cover his bases here, too, with a backyard sign that reads: "No hurricanes."

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: Ritz-Carlton Residences Palm Beach Gardens snares big building loan