MIAMI—The Shore Club, a luxury hotel in South Beach, just secured $185 million in refinancing. Carlton Group chairman Howard Michaels arranged the deal.

Shore Club, a legendary 309-room hotel, is morphing itself into a luxury condominium. The new owner, New York-based HFZ Capital Group, is reinventing the 1901 Collins Avenue hotel in Miami Beach, FL.

The Carlton-managed refinancing provides the funding required to reposition the property, revamping it into 85 deluxe residential condos and 100 luxury hotel rooms. The lender was Banco Inbursa, a Mexico-based bank run by Carlos Slim.

The Shore Club has a history of celebrity sightings and is home to an infinity pool, rooftop spa, and direct beach access. When complete, the hotel will offer 85 luxury condo residences and 100 hotel rooms.

Designed by British modernist, David Chipperfield, the landmarked Art Deco hotel lobby flows seamlessly and mysteriously from indoor to outdoor spaces. It features labyrinthine gardens inspired by Jardin Majorelle in Marrakech.

Amid gains in travel volume, all key measures of US hotel performance are expected to increase during 2014 and extend the hotel sector's multi-year run, Marcus & Millichap says in its fourth-quarter report on the sector. “The potential for overbuilding exists, but thus far new supply has minimally affected market-level performance,” according to MMI's report. “Hotel construction is occurring where there is unfulfilled demand, and not simply a suitable site.” Compared to the surge during the previous building boom, the uptick in construction spending this time around has been “rather tame.”