CPG Completes Transaction to Acquire Dorado Beach and Cerromar Hotels

(CARIBBEAN BUSINESS) 12/20/2007

CPG completes transaction to acquire Dorado Beach and Cerromar hotels. New owners evaluating possible operators; retrofitting and rebuilding of properties could begin first quarter of 2009
By JOSE L. CARMONA

The transaction to acquire landmark hotels Dorado Beach and Cerromar in Dorado through a joint venture by Caribbean Property Group (CPG) and local developer Federico Stubbe was completed Dec. 7 [2007], Stubbe confirmed to CARIBBEAN BUSINESS.

Stubbe said the transaction with the Pritzker family, owners of the Hyatt hotel chain to which both hotels belonged, was made through a private equity fund for an undisclosed amount and involved the Dorado Beach, Cerromar, four golf courses, adjacent properties and residential developments.

Tentative plans call for converting the Dorado Beach into a five-star hotel and the Cerromar into a four-star hotel plus residential and commercial developments. Total planned investment in both properties surpasses the $1.5 billion mark, noted Stubbe.

"Right now, we are evaluating who will be operating those two hotels, the Dorado Beach and Cerromar. We will also begin evaluating the architectural part, and the main issue here will be whether it's more feasible to remodel Cerromar, how to do the rebuilding and the extent of the demolition if it comes to that. There are several main issues here to consider," commented Stubbe.

The local developer said the structural and design codes have changed since the structures were originally built back in the '60s and therefore they cannot rebuild using the same old building codes.  Secondly, luxury facilities nowadays are much more demanding and require amenities and facilities not currently available at both properties.

"All this is under evaluation. We expect to have some decisions made by January in order for us to proceed," added Stubbe. "We first have to go through a design and permitting process, which will probably take us all of 2008, and we will hopefully begin construction full blast by the first few months of 2009. We hope to have all the planning structured by the first quarter of next year."

Best-case scenario has both hotels opening sometime in 2010. Stubbe said that in order for Puerto Rico to compete in the global market, it needs large-scale projects of the kind not currently available on the island.

"To be a world's best destination you have to go large scale, and that's why we're being so cautious in the way we disclose information about this project," added Stubbe.

Kal Editorial Comment

Caribbean Property Group LLC is a real estate investment firm, with offices in New York, San Juan, Mexico City and West Palm Beach, that is engaged in the business of owning and operating real estate in Puerto Rico, the Caribbean Basin and Mexico across four platforms – retail, warehouse, office and hotel. CPG's hotel assets include The Ritz-Carlton San Juan Hotel, Spa and Casino [click here] and the Radisson Ambassador Hotel and Casino [click here].