By Tim O’Meilia
The beleaguered Palm Beach Oceanfront Inn, which has stirred South Palm Beach politics for five years, has been sold to a Delray Beach financier and investor in distressed properties.
The 58-unit, two-story motel on the ocean — the only business in a town laden with condominiums — has been in foreclosure since February 2011 and its owners in Chapter 11 bankruptcy since March.
Gary Cohen, CEO of Paragon Acquisition Group LLC of Boca Raton, confirmed the October sale but declined to say how much he paid. Sale documents have yet to be filed with the Palm Beach County clerk’s office.
“We paid market price for it, less than their asking price,” Cohen said. The Palm Beach County Property Appraiser lists its market value at $3.8 million, but that figure is often less than the actual market.
The former owners, the Paloka family, briefly listed the 54-year-old motel for sale at more than $12 million in mid-2011 but quickly withdrew it from the real estate market.
“They don’t make any more beachfront, especially not in the South Palm Beach area,” Cohen said of the purchase of the struggling operation.
He said he plans to revive the motel, update the rooms, improve the landscaping, examine the seawall and upgrade the restaurant and bar. Cohen said he hoped to take bids in the next month or two.
“We’re exploring all possibilities on the site. We’re looking at both a hotel operation and the possibility of a development project in the future,” he said. “It’s a stunning piece of property, completely underutilized.”
Cohen said his first order of business is to rebuild friendly relations with the townspeople. “We are planning to be a good neighbor first. We need to bring the good will of the property and bring it back as a good hotel,” he said.
He said he planned to set up meetings with neighbors to “re-introduce everyone to the hotel.” He made an appearance at the Town Council meeting Nov. 28.
“I’ve talking to so many people who said they will not eat there anymore because of the Palokas,” Cohen said.
The Palokas bought the motel, then called the Palm Beach Hawaiian Inn, in 2002 for $3.3 million. Four years later, they began a quest to build a taller condo-hotel and became embroiled in town politics.
Their business entity, Kosova Realty, sought approval for a $250 million, 14-story building with two underground parking levels but it was rejected the next year.
A second attempt at a scaled-back 10-story, 99-unit design also was rejected in 2009.
In early 2010, town voters made zoning changes more difficult by requiring a referendum. The long-running issue pitted condo owner against condo owner and became the primary town council election issue for years.
In self-described biographical notes, Cohen said Paragon has acquired $100 million in distressed properties in the last year, although none in Palm Beach County. He said he is involved in a possible redevelopment in Highland Beach but nothing is imminent. Other purchases include Miami Beach property.
He was a principal and founder of CMA Development Group, which focused on hotel development in Orlando and Miami.
One 2006 CMA project, the Blue Rose, was to have been a 39-story, 1,500-room condo-hotel resort with a 1,000-seat performing arts theater along the International Drive entertainment district of Orlando.
The $850 million project, “inspired by New York sophistication, the sizzling passion of Miami and the all night excitement of Las Vegas,” has yet to be built and Cohen pulled out several years ago.
“I had a general partner who had visions of grandeur and he could not fulfill them. Hopefully I will never go to Orlando again for a project,” Cohen said with a laugh.
Cohen said a decision on redeveloping the Palm Beach Oceanfront Inn property is for the future. “Right now we want to bring it back as a good hotel and restore the neighborly feel so people who live nearby will feel welcome and want to come in,” Cohen said.