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Management takeover at exclusive Miami hotel

Guests at one of Miami’s most expensive oceanfront resorts – the Setai South Beach – woke up this morning in a hotel under entirely new management.

The owners of the serene hotel staged an unusual, middle-of-the-night takeover, ousting the current management company and installing a new one that specializes in luxury hotels, lawyer William Brewer III told USA TODAY during a telephone interview this morning.

Brewer, a partner at Bickel Brewer and counsel for the owner, last year orchestrated a similar takeover on behalf of the owners of Marriott’s former Edition Waikiki hotel, capping a long-simmering business dispute.

A unit of Lehman Brothers owns the Setai property.

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The Setai takeover – triggered by a business dispute with Singapore-based hotel management firm GHM – has so far gone smoothly so far, as far as guests are concerned, Brewer says.

“It happened without incident. It’s been a seamless transition for the guests,” he says.

The Setai hotel is currently ranked No. 14 out of 204 Miami Beach hotels reviewed on TripAdvisor.

The ousted group is Singapore-based General Hotel Management and GHM (South Beach) LLC, which began in 1992, according to its website. According to its website, it currently operates six other hotels and has seven others under development, all of which are outside the USA.

USA TODAY has sent an email and left a voice mail message with a lawyer who Brewer says appeared at the Setai at 4 a.m. on behalf of the ousted management company, but the messages have immediately been returned. An email was also sent to GHM via its website.

The understated, Asian-inspired Setai features a 40-story tower set amid lushly landscaped tropical gardens and three swimming pools. It also contains a spa and several restaurants and bars. The least expensive rate for night’s stay for Sunday night, according to the hotel’s current website, is $725.

The hotel will keep its name and most of its employees, Brewer says. It will also keep its affiliation with the luxury hotel marketing organization, Leading Hotels of the World.

The Setai’s ownership group, Setai Owners LLC, is a unit of Lehman Brothers. It holds ownership interests in significant portions of the Setai, including most of its condominium units. Lehman Brothers’ new management team notified guests, condo owners and employees, according to the law firm.

Takeover different from last year’s Edition saga

Last summer, there was a dramatic takeover at Marriott’s former Edition Waikiki hotel, which was prompted by the hotel’s financial losses.

This case is somewhat different, Brewer says. This takeover concerns allegations of inadequate management, according to filings. The owner claims the hotel should be more profitable.

Along with the takeover, Lehman Brothers Holdings also began an international arbitration against GHM, amid charges that the management company violated terms of the March 2000-dated management agreement.

Lehman Brothers filed a “request for arbitration” notice at the International Court of Arbitration of the International Chamber of Commerce in Paris. The filing provides a glimpse as to the hotel’s budgets over the past two years and why the owners take issue with it.

“In 2010-2011 alone, the Hotel’s Rooms Department incurred excessive expenses of over $2 million, its Administrative and General Department incurred excessive expenses of approximately $2.3 million, and its Marketing Department incurred excessive expense of approximately $3.3 million. Had GHM not negligently expended those amounts – and, instead, operated more efficiently – Owner would have realized an additional $7.6 million in incremental profit.”

In a statement, an executive talks about what prompted this aggressive action.

“We believe that under the right management, this property has limitless potential,” Anthony Barsanti, vice president of Lehman Brothers Holdings, said in a statement.

Lehman Brothers installed as the new operator Dallas-based Trevi Luxury Hospitality Group, which is led by Atef Mankarios, a former CEO of St. Regis Hotels Resorts.

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