A 64,000-square-foot building connected to the Hotel St. Regis in the New Center Area was purchased at auction by the same person who bought the Park Apartments building in February; the buyer also has a Wayne County-owned downtown office building under contract.
Joe Barbat, the CEO and chairman of Southfield-based Wireless Toyz, said he closed Monday on the purchase of the 64,000-square-foot building, which he will rename the St. Regis House and turn into 60 apartment units with new electrical, plumbing, heating and cooling. New kitchens and floors are also expected, as is valet service and rooftop terrace amenities, he said.
He said there will be 54 one-bedroom units and six studios with square footages ranging from 500 to 800 square feet. He expects the units to rent for about $1.50 per square foot, or $750 to $1,200.
“We are pretty comfortable with that range,” Barbat said.
He declined to say the purchase price, but said the entire project — including the cost of buying the building and the renovations — is expected to be $3.5 million to $4 million. Once financing and other approvals are received, construction can be completed within 10 to 14 months, he said.
Barbat also said he has the 86,000-square-foot Phillip Neudeck office building, located at 415 Clifford St., under contract and plans to close on it within the next 30 days. He plans to convert it into 100 apartment units. The redevelopment, including the cost of the building, would be between $6.5 million and $7 million, he said.
“The due diligence is finalized, and we are ready to go,” he said.
The Detroit office of Jones Lang Lasalle is marketing the building for sale.
The starting bid at the St. Regis building auction, which began April 21 and ended April 23, was $300,000. It had been owned by St. Regis Sky Group LLC — an entity registered to Deepak Bhalla, vice president of operations for Detroit-based Lakeshore Healthcare Group.
According to Ryan Snoek, a Detroit real estate consultant who was the listing broker on the sale, the 225-room Hotel St. Regis is not affected by the sale. He said during an April interview with Crain’s that the building, which was built in 1987, would need substantial renovation.
The first floor of the six-story vacant building could be used for restaurant or banquet space, the Auction.com listing said.
The hotel is owned by Shirley Wilson of Southfield, according to Washington, D.C.-based real estate information service CoStar Group Inc. It was sold in 2011 for $850,000 to Wilson, one of the group of investors who renovated and reopened the hotel in 2007.
Herbert Strather, CEO of Strather Academy and Strather Associates in Detroit, led the redevelopment team. In February 2009, two years after the renovation, the hotel defaulted on a loan from Chicago-based Shorebank Corp.
After Shorebank shut down the hotel in August 2010, much of its $2.2 billion in assets and $1.5 billion in deposits — including the Hotel St. Regis — were bought by a new entity, Urban Partnership Bank.
The hotel was then put up for auction by Southfield-based turnaround firm BBK in January 2011. St. Regis Sky Group won the auction, but the original ownership group had right of first refusal to buy the hotel from the amount arrived at by the auction: $850,000.
Barbat plans to turn the Park Apartments, which he bought in an off-market deal for $3.25 million, into the Briggs House residence to reflect its history as the former Hotel Briggs. The building was built in 1937.
Barbat plans to convert the 17-story building into 116 units by merging some of the studio units to create more one-bedroom units.
Barbat, also the founder of West Bloomfield Township-based Barbat Holdings LLC, a real estate development company, said he is still working on securing financing from the Michigan Economic Development Corp. and the Detroit Economic Growth Corp.
Barbat said Monday that, once approvals and financing is secured and shovels are in the ground, the Briggs House project would take 12-18 months to complete.
Source: Crain’s Detroit