Puerto Rico's Royal Isabela Resort Seeks Sale or Partner at $250 Million Value

Gillian Tan, Bloomberg News

(Bloomberg) -- The owners of Puerto Rico’s Royal Isabela resort and golf course are seeking a joint venture equity partner to help fund an expansion, or an outright sale of the property.

A transaction for Royal Isabela, on the U.S. commonwealth’s northwest coast, may value the property at as much as $250 million, according to a person with knowledge of the matter. The estate, founded by former professional tennis player Charlie Pasarell and his brother Stanley, is expected to attract real estate-focused private equity firms, high-net-worth individuals and family offices. Expressions of interest are due by the end of May.

The Pasarell family is working with JLL, a commercial real-estate services company, “to identify a strategic partner or buyer who recognizes the extraordinary potential of the property,” Shelby Pasarell Tsai, Royal Isabela’s vice president of operations and development, said in an emailed statement.

The 1,800-acre (728-hectare) estate has a hotel, golf course and four residences, though its owners are permitted to build as many as five hotels, three golf courses and more than 800 residences. Its revenue per available room, at $158, ranked among the highest among U.S. locations last year, according to a document sent to potential investors seen by Bloomberg News.’

Puerto Rico has for years attracted U.S. investors in search of tax benefits, most recently luring crypto traders seeking to avoid steep levies on short-term profits. They’ve gravitated toward areas like the St. Regis Bahia Beach Resort and the Ritz-Carlton-branded Dorado Beach resort, which are closer to San Juan.

Meanwhile, billionaire John Paulson is considering selling two iconic hotels in Puerto Rico’s capital, which his investment firm bought in 2014 for $260 million.

The 96-room Dorado Beach was acquired last month by Braemar Hotels & Resorts Inc., a real estate investment trust, at a total consideration of $193 million.

“The success of projects like Dorado Beach and Bahia Beach Resort are a great example of what Isabela could be,” said Andrew Dickey, managing director of hotels and hospitality at JLL.

Charlie Pasarell, who along with his brother is a ninth-generation Puerto Rican, is also known for his professional tennis pursuits. He counted the late Arthur Ashe as both a doubles partner and rival.