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Bancorp sues former Turnberry execs over stalled resort in Fort Lauderdale
The lender says it is owed $37M in loans on a project that pulled in $30M in EB-5 financing
The financial services firm Bancorp Bank has filed a lawsuit seeking to foreclose on a troubled, unfinished Fort Lauderdale hotel resort, charging the developers have defaulted on $37 million in loans. The defendants, who were able to attract $30 million in EB-5 financing, appear to have traded on their ties to a well-respected development company, though the company denies it was involved in the project. The Senor Frog’s restaurant chain also figures into the suit. More on that later.
The defendants are listed as two LLCs, 550 Seabreeze Development LLC and Jawof 515 Seabreeze LLC. The 550 Seabreeze LLC has ties to former executives at Miami-based developer Turnberry Associates. The suit was filed in U.S. District Court in Fort Lauderdale.
The corporations both control sites for the unfinished Las Olas Ocean Resort at 550 Seabreeze Boulevard.
That 12-story complex has topped out, but is not complete and construction has stalled. A website for the project shows a livestream video of the site with nothing happening. The website also describes the developers as “a group of well-experienced executives of Turnberry Associates,” a family real estate development company that is run by Donald Soffer.
It lists a Turnberry-owned suite at the company’s Aventura Mall as a contact address. A spokesperson for Turnberry said the company “has no involvement in this project whatsoever.”
Bancorp provided 550 Seabreeze Development LLC a $50 million mortgage in 2013 with the hotel properties as collateral. Included in the loan was the property at 515 Seabreeze, which was meant for a later expansion of the hotel.
The suit alleges that the entities failed to finish the resort by its planned March 2017 completion date, failed to make its December 2017 loan payment, and made unapproved changes to its project budget in violation of the loan agreement.
The LLCs also broke the loan agreement, the suit alleges, when they terminated a lease deal with the Senor Frog’s chain of restaurants. They also booted property manager Aston Hotels and Resorts Florida LLC without finding a replacement within an agreed two-week window, according to the suit.
The 550 Seabreeze Development LLC purchased the property in 2003, a deed shows. The developers at one point sought EB-5 investors, a government program that allows foreign investors who contribute $500,000 or more to a development to obtain American citizenship. Las Olas Ocean Resort raised at least $30 million from 60 EB-5 investors through December 2015. The resort website still promotes EB-5 financing.
The resort hotel would have featured 136 rooms and a 276-vehicle parking facility, according to a May 2015 documents, and would be branded under the Preferred Hotel franchise. It called for a cafe and an “Ocean Club,” according to the document.
The project had suffered from numerous delays throughout its construction, including have to wait nine months for a Broward County approval of architectural and engineering plans. Another six-month delay was in order to comply new Federal Emergency Management Agency flood plain requirements.
The registered agent for 550 Seabreeze Development LLC is Raymond Parello, a former director of finance at Turnberry who left the firm 12 years ago, according to a Turnberry spokesperson. A 2017 annual report for the LLC filed last year, however, still lists a Turnberry suite at the Turnberry-owned Aventura Mall as the company’s mailing address. The LLC purchased the property in 2003, and Parello was named registered agent using the Turnberry address in 2005.
A parcel neighboring the hotel site, 525 South Fort Lauderdale Beach Boulevard, is also connected to the LLC and Turnberry’s Aventura Mall address, according to Broward County property records. That parcel is in the care of Stan Roman, a former employee of Turnberry who retired sometime before 2017, a spokesperson said.
A representative for 550 Seabreeze LLC could not immediately be reached for comment. Efforts to reach Parello and Roman were unsuccessful.