The West Palm Beach resort hotel remains unbuilt, but the project’s developer says he has a plan to start construction.
Banyan Cay Resort & Golf, the partly built resort in the heart of West Palm Beach, has brought in a Miami-based investment partner to help complete construction and turn the project into a more upscale hotel than originally planned.
Gencom of Miami has taken a major stake in Banyan Cay, creating a 50-50 partnership in the venture, according to Banyan Cay developer Domenic Gatto, Jr.
Banyan Cay is the biggest redevelopment project in West Palm Beach since Rosemary Square, formerly called CityPlace. The $100 million Banyan Cay complex is just east of Interstate 95, off of Congress Avenue and north of Palm Beach Lakes Boulevard.
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Four years ago, Gatto’s Banyan Cay Dev LLC paid $26 million for the 250-acre property, which used to be the site of the President Country Club.
Gatto sketched out a vision that led to Banyan Cay, featuring a golf course redone by golf great Jack Nicklaus and a hotel managed by boutique Noble House Hotels & Resorts. A lushly landscaped enclave featuring a fitness center, pool, cabanas, tennis center, tiki hut and spa, plus meeting space, was also envisioned.
Gatto finished the golf course and the clubhouse. But construction of the hotel stopped in April, and Banyan Cay and Noble House have parted ways.
The hotel, just a shell building without windows, has been an eyesore and a source of concern for residents in the adjacent Lands of the President community, as well as home buyers in the SobelCo. housing development being built next to the resort.
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Gatto has cited various reasons for the work stoppage.
They include his inexperience as a hotel developer and his decision to halt construction so the hotel would not open during the slow summer months of 2020. He also promised work would start up again in the summer, and then more recently, by this month.
Gatto has denied he has money problems.
In addition to the more than than $40 million poured into the project by Gatto and his investors, Banyan Cay obtained a $62 million loan from Calmwater Capital last year.
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Nonetheless, there’s no question Gencom is a deep-pocketed partner who can finish the job, said Randall Greene, an Orlando hotel developer who used to live in the Lands of the President community.
“Gencom is a very well-known player in the hotel industry, especially among the larger hotels around the country,” Greene said. “They have a substantial amount of capital and are the angel investor (Domenic) needed.”
Indeed, with Gencom now on board, Gatto said the hotel’s construction will start up again, but not until January.
Plans are afoot to tweak Banyan Cay’s interiors to create more luxury touches, including adding a club level at the hotel, a feature included in many Ritz-Carlton hotels, Gatto said.
Gencom owns numerous luxury hotel properties, including the Ritz Carlton on Key Biscayne.
In addition, plans are to build 22 one-story villas when the hotel restarts construction. Prices for the 1,800-square-foot villas will start at a whopping $1 million.
These villas will be part of the hotel’s inventory, bringing the total hotel “keys” to 172 from 150, Gatto said.
The project tweaks, plus the looming holiday season, are the reasons why construction will have to wait until January, with the hotel’s completion now set for early 2021 instead of fall 2020.
Gatto said the delay will be worth it.
Gencom’s involvement takes Banyan Cay to the “next level,” he said. That’s because Gencom is skilled in building and managing luxury resorts.
In fact, Gatto said he has worked for months to bring in a luxury developer to help him craft a more upscale resort. “We have worked to achieve the highest product we can,” Gatto said. “This is the partnership I was looking for.”
Gencom officials could not be reached for comment. But in a statement, Gencom founder Karim Alibhai said the partnership revives Banyan Cay and will bring it to completion.
Gatto said Gencom had been looking to acquire a hotel property in Palm Beach County and was particularly attracted to Banyan Cay’s for-sale villas. Gencom has experience managing Ritz Carlton hotels that feature residences.
The planned villas are not intended for full-time residency. Instead, they will be marketed to people who visit Palm Beach County for a few weeks or months a year, Gatto said.
When owners are not using their villas, they can put them in the hotel’s reservation rental pool, allowing owners to earn income on their investment.
Target investors include snowbirds, as well as baseball players who participate in spring training at the FitTeam Ballpark of the Palm Beaches, Gatto said.
Meanwhile, SobelCo., a Boca Raton-based home builder, continues to build 94 single-family homes, with the Banyan Cay resort as a lure.
Homes come with a three-year social membership in the resort. Prices range from $535,000 to more than $700,000 for the three- and four-bedroom homes.
H. Adams Weaver, a partner at the Jones Foster law firm, is one buyer who was attracted to the amenities and free membership of the Banyan Cay Resort.
Weaver and his wife, Bonnie, closed on the purchase of a home at the Residences at Banyan Cay in July. While they enjoy the club house, the hotel remains an unrealized perk.
On Wednesday, Weaver said he sees Gencom’s involvement in the deal as good news.
But other nearby homeowners privately say they’ll believe it when they see it. “We all feel that way,” one homeowner said.
Weaver was disappointed to learn the resort would not be ready next fall as promised, but instead would open in early 2021.
“That’s a long time,” Weaver said. “But what am I going to do? I can’t move so I’m stuck.”
Gatto said he understands the frustration, which is why he’s worked to bring in a credible partner.
A Gencom affiliate, Benchmark Hospitality, will manage the golf operations and eventually, the hotel.
In October, Gatto said talks were underway to turn Banyan Cay into a Hyatt/Destination Resorts property, a boutique luxury hotel brand.
But on Wednesday, Gatto said a brand had yet to be determined.