European Beach House

721 Michigan Avenue, South Beach Flamingo Park Historic District

Neal R. Deputy

690 Lincoln Road

Miami Beach , FL 33139

Cell: (305) 467-4026

Fax: (305) 305-7592

nealdeputy@gmail.com

OFFERING MEMORANDUM

A Licensed Hotel Complex in the Heart of South Beach

$2,499,000

Architect’s Rendition by Tony Leone Architect

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Existing Street Elevation

Cover

Contents

Introduction

Location & Environs Map

City Zoning Verification Letter

Ground Floor Plan

Second Floor Plan

Exterior Photographs

Interior Photographs

Weekly Rental Proforma

Comparable Hotel Sales

Hotel & Rooming House Codes

About South Beach

About Miami

Notes to Bidders

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CONTENTS

INTR

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Licensed Short Term Rental properties are exceedingly rare in the Art Deco Historic District of South Beach and The European Beach House provides extraordinary potential for a variety of enterprises. Built in 1921 in the Craftsman Bungalow style, this 7,000 square foot complex is comprised of eleven (11) Short Term Rental Units disposed around a central courtyard. The Main House at Street Front provides an entry porch, lobby, seven rental units (all with private baths) and upstairs common areas. The Courtyard Building to the rear of the site is contemporaneous and provides four units with private entries, private baths, and private gardens. See floor plans on following pages for room layouts and exterior features.

The European Beach House was originally converted to transient rental use in the 1940s to serve the lodging needs of America’s Armed Forces during WWII. Troops would train on the beaches by day and relax in the inviting tropical environs of this and other “Rooming Houses” by night. Known as “Anker House” in the 1940s, it became “Helen’s Apartments” for much of the 60s and 70s and was ultimately converted to The European Guest House in the 1980’s. Beamed ceilings, bay windows, porches, decks, terraces, and lush tropical landscape define and characterize this important historic landmark.

The Subject property has been in continuous operation since 1922 and is currently undergoing renovation and revitalization. The current owners are working in tandem with local professionals and the City of Miami Beach to ensure that all historic, building code, and licensing requirements are met. Asking prices for similar establishments in the Art Deco Historic District hit $650,000 per key (see Comparable Hotel Activity, page 14) making the price of the European Beach House at $227,000 per key a true value- a rarity in South Beach. Note that the “Roominghouse” designation for the subject property allows for remote management- free from the cumbersome demands of other short-term rental properties. Also, the ability to serve Food and Beverages to guests round-the-clock adds significantly to potential income and is a more liberal use than is allowed for either Hotels or Bed & Breakfast Inns in the District. Finally, commercial signage to advertise the establishment is allowable on site (up to 20 square feet) and no additional parking or impact fees are required of the new owner.

Stair to Courtyard Building B

INTRODUCTION

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Sailing the Bay Lincoln Road Mall Fun in the Sun

Miami Beach Convention Center

Collins Avenue Shopping District

Alton Road Arts District World Famous Ocean Drive 5th Street to Miami

Flamingo

Park

Art Deco

Historic District

South Beach

Tennis?

European Beach House

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LETTE

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ZONING VERIFICATION LETTER

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FLO

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GROUND FLOOR PLAN

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B-2

LOBBY

A-3

B2

A-2

A-4

B-1

A-1

ENTRY

Space for Private Outdoor Showers

and Gardens

Private Entry and Garden for Unit

B-2

Stair to Units B-3, B-4, and

Baloneys above

Courtyard Overlook above

Generous Courtyard with ample

room for a Swimming Pool

Stair to Common Areas above

Space for Private Outdoor Showers

and Gardens

Elegant Entry with Porch and

Lobby

Ample Lawn Area for Landscape

or other Features

Existing Curb cut with Drop-Off

and Delivery Space

Commercial Signage allowable

By-Right

All Units are provided with Private

Baths

SEC

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SECOND FLOOR PLAN

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Private Porch for Unit B-4

Shared Porch Entry for Units B-3

and B-4

Stair to Units B-3, B-4, and

Balcony

Courtyard Overlook

Private Deck for Unit A-7

overlooking Courtyard

Common Area Lounge on Second

Floor

Most Units are Corner Located. All

Units have Private Baths

DECK

DEN A-7

A-5 A-6

BALCONY

B-3

B-4

Courtyard Below

EX

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European Beach House

from the Street

Courtyard between Buildings

A & B

Stair Leading to

Courtyard

Building B at

Rear of Site

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Courtyard Building and Stair to

Balcony above

Apartment

Building at

Rear of

Property

Bathroom #3 Undergoing Repairs

View to Street

from Second Floor

Balcony

09

View of Main Building and

Courtyard from Building B Balcony

Courtyard view from Covered

Terrace outside Unit B1

Private Gardens at Rear

of Units B1 & B2

View of Courtyard Building B and

Courtyard

EX

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Enclosed Entry Porch

(Formerly Open)

Entry Lobby Leading to

Central Stair and

Adjoining Rooms

Beamed Ceiling and

Wood Paneled Doors in

Entry Lobby

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Second Floor Lobby and Stair

Landing

Typical Room with A/C, Ceiling

Fan, Private Bath, and Tiled

Floors

Entire Facility is Protected by

Commercial Quality Fire Alarm

Equipment

European Beach House Short Term (Weekly) Rental Proforma

Income: Year #1 @ 65% Occupancy Expenses: Typ. Annual

UNIT # TYPE: WEEKLY ANNUAL ITEM: EXPENSE:

1 Single $999 $51,948 Property Taxes $38,000

2 Single $999 $51,948 Sales & Resort Tax Added

3 Single $999 $51,948 Insurance $12,000

4 Single $999 $51,948 Water/Sewer $5,400

5 Single $999 $51,948 Electric $3,600

6 Single $999 $51,948 Garbage $2,400

7 Single $999 $51,948 Landscape $2,400

Pest Control $1,200

8 Double $1,299 $67,548 Licenses $500

9 Double $1,299 $67,548 Fire Inspection $95

10 Double $1,299 $67,548 Property Mgmt $24,000

11 Double $1,299 $67,548 Maint. & Repairs $12,000

Advertising $18,000

Housekeeping $20,800

Unknowns (10%) $16,000

Total GPI: Weekly= $12,189 Annual= $633,828 Total Expenses= $156,395

Adjustments to GPI: Year 1 NOI @ 65% Occ= $382,359

Peak Week Premium 15% $95,074 Year 2 NOI @ 70% Occ= $414,050

Ancillary Services 5% $31,691 Year 3 NOI @ 75% Occ= $445,742

Occupancy Year #1 65% $411,988 Year 4 NOI @ 80% Occ= $477,433

Year 5 NOI @ 85% Occ= $509,124

Adjusted: Monthly= $44,896 Annual= $538,754 Cape Rate @ Year 1 = 12.75%

Cap Yr 1 Cap Yr 2 Cap Yr 3 Cap Yr 4 Cap Yr 5 Cap Rates reflect a total

12.75% 13.80% 14.86% 15.91% 18.18% investment of $3,000,000

WEEKLY RENTAL PROFORMA

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Address Month Sale Price BLD'G SF Cost/ SF Units Cost/Unit Name

347 Washington ACTIVE $13,900,000 11,140 $1,248 24 $579,167 St. Augustine

1415 Collins ACTIVE $8,500,000 7,980 $1,065 17 $500,000 Villa Paradiso

1018 Jefferson ACTIVE $6,500,000 3,956 $1,643 10 $650,000 B&B Inn

354 Washington ACTIVE $6,800,000 5,916 $1,149 13 $523,077 Villa Italia

235 18th St ACTIVE $4,950,000 3,375 $1,467 12 $412,500 Boutique 18

825 Washington SOLD $28,500,000 32,662 $873 75 $380,000 Clinton Hotel

7450 Ocean Ter SOLD $29,250,000 53,102 $551 93 $314,516 Days Inn

1775 James SOLD $12,900,000 15,557 $829 46 $280,435 Hotel 18

1506 Collins SOLD $11,000,000 21,832 $504 30 $366,667 Eva Hotel

1120 Collins SOLD $15,475,000 30,954 $500 54 $286,574 Nash Hotel

TOTAL: $137,775,000 118,131 374

AVERAGE: $1,166 $368,382

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COMPARABLE HOTEL ACTIVITY

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HOTEL & ROOMING HOUSE CODE

Miami Beach is a coastal resort city located

in Miami-Dade County, Florida.

Incorporated on March 26, 1915, it is

located on a series of natural and man-made

barrier islands between the Atlantic Ocean

and Biscayne Bay, the latter separates the

Beach from Miami city proper. The historic

neighborhood of South Beach, comprising

the southern- most 2.5 square miles of

Miami Beach, along with Downtown Miami

and the port, collectively form the

commercial center of South Florida. As of

the 2010 census, the city had a total

population of 87,779. Miami Beach has

remained one of America's pre-eminent

beach resorts for the past 100 years.

In 1979, Miami Beach's Art Deco Historic

District was listed on the National Register

of Historic Places. The Art Deco District is the

largest collection of Art Deco architecture in

the world comprising hotels, apartments

and other structures erected between 1923

and 1943. Mediterranean, Streamline

Moderne, and Art Deco are all represented

in the District. South Beach is bounded by

the Atlantic Ocean on the East, Lenox Court

on the West, 6th Street on the South and

Dade Boulevard along the Collins Canal to

the North. The movement to preserve the

Art Deco District's architectural heritage was

led by former interior designer Barbara

Capitman, who now has a street in the

District named in her honor.

Miami Beach has a tropical climate with hot

humid summers and warm dry winters.

Other than the Florida Keys, Miami Beach

has the warmest winter weather in the

United States (mainland). The warm and

sunny weather in Miami Beach and South

Florida attracts millions of travelers from

around the world from November through

April. Sea surface temperatures range from

75 F in winter to 86 F in the summer/fall

months. Miami Beach has the warmest

ocean surf in the United States annually.

Median Resident age in 33139: 38.9 yrs Median Resident Age in FL: 40.5 yrs Average household size in 33139: 1.7p Average household size in FL: 2.6p Average AGI in 2010 in 33139 $89,607 Average AGI in 2010 in FL $50,523 Average Wages filed in 33139: $52,304 Average Wages filed in FL: $39,563 33139 population in 2010: 32,255 33139 population 2000: 38,441 Houses and Condos: 36,412 Renter-occupied Apts: 16,452 % of Renters in 33139: 69% % of Renters in FL: 31%

March 2012 COL index : 117.2 Well above U.S. average: 100.0 Land area in square miles: 2.7 Water area in square miles: 3.3 RE property taxes for housing units in 2010 in 33139: (1.2%) $4,175

Florida: ( 1.0%) $1,882 Median RE property taxes paid for housing with mortgages in 2010: 5 (1.4%) $4,665 Median RE property taxes paid for housing with no mortgage in 2010: 5 5 (1.1%) $3,466

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ABOUT SOUTH BEACH

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ABOUT MIAMI

Miami is a city located on the Atlantic coast in southeastern Florida and the county seat

of Miami-Dade County. The 42nd largest city proper in the United States, with a

population of 408,568, it is the principal, central, and most populous city of the Miami

metropolitan area, and the most populous metropolis in the Southeastern United States.

According to the U.S. Census Bureau, Miami's metro area is the seventh most populous

and fourth-largest urban area in the United States, with a population of around 5.5

million.

Miami is a major center and a leader in finance, commerce, culture, media,

entertainment, the arts, and international trade. In 2010, Miami was classified as a Alpha-

World City in the World Cities Study Group’s inventory. In 2010, Miami ranked seventh

in the United States in terms of finance, commerce, culture, entertainment, fashion,

education, and other sectors. It ranked thirty-third among global cities. In 2008, Forbes

magazine ranked Miami "America's Cleanest City", for its year-round good air quality,

vast green spaces, clean drinking water, clean streets and city-wide recycling programs.

According to a 2009 UBS study of 73 world cities, Miami was ranked as the richest city in

the United States, and the world's fifth-richest city in terms of purchasing power. Miami

is nicknamed the "Capital of Latin America", is the second-largest U.S. city (after El Paso,

Texas) with a Spanish-speaking majority, and the largest city with a Cuban-American

plurality.

Downtown Miami and South Florida are home to the largest concentration of

international banks in the United States, and is home to many large companies both

nationally and internationally. The Civic Center is a major center for hospitals, research

institutes, medical centers, and biotechnology industries. For more than two decades,

the Port of Miami, known as the "Cruise Capital of the World," has been the number one

cruise passenger port in the world, accommodating some of the world's largest cruise

ships and operations, and is currently the busiest in both passenger traffic and cruise

lines

Miami has a tropical monsoon climate with hot and humid summers and short, warm

winters, with a marked drier season in the winter. Its sea-level elevation, coastal location,

position just above the Tropic of Cancer, and proximity to the Gulf Stream shapes its

climate. The wet season begins sometime in May, ending in mid-October. During this

period, temperatures are in the mid 80s to low 70s. Much of the year's 55.9 inches (1,420

mm) of rainfall occurs during this period.

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In conclusion, the subject property offers a rare and singular opportunity to own and

operate a highly desirable short term rental facility in the heart of South Beach-

America’s playground and the world’s entertainment mecca. Furthermore, additional

upside can be anticipated in the development of on-site amenities, food and beverage

operations, and the full range of services available in close proximity.

Real Estate deals in South Beach tend to fall into very low cap rate long term equity

plays. Further, available inventory is virtually nonexistent in the Art Deco District and

most deals currently being presented produce very low returns. 721 Michigan Avenue

provides a solid investment for the discerning investor, developer, or operator with

tremendous upside potential and long term value.

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NOTES TO BIDDERS Please do not explore the premises without the Listing Agent. Viewings of the site and

interiors will be promptly arranged following receipt of an acceptable Letter of Intent.

This brochure is intended solely for informational purposes to assist in determining if one

wishes to proceed with further due diligence investigation of the property. The

information included herein has been obtained from sources deemed to be reliable but

no representations, guarantees, or warranties with respect to this information are being

made. Additionally, this information is subject to change at any time without notice to

recipients.

Risks are involved in any real estate purchase. It is the investor’s responsibility to

independently verify any data relied upon for an investment using qualified legal,

financial, and operations advisors. Projections, opinions, assumptions, or estimates used

in this memorandum are illustrative examples only. Prior to investing in real estate,

investors should also carefully consider possible tax consequences and legal

requirements.