The Real Deal Miami

Fort Lauderdale hotel project to head to auction with $39M stalking horse bid

Magna Hospitality Group would receive $500k break-up fee if outbid in August
By Katherine Kallergis | July 12, 2018 04:45PM

The incomplete Las Olas Ocean Resort on Seabreeze Boulevard in Fort Lauderdale

The owners of an unfinished hotel in Fort Lauderdale Beach secured a stalking horse bidder for $38.6 million, potentially paving the way for an auction in August.

In January, Bancorp Bank filed a foreclosure suit against 550 Seabreeze Development LLC and JAWOF 515 Seabreeze LLC, alleging default on a mortgage loan with an unpaid principal balance of $36.9 million. And last month, the developer filed a motion in bankruptcy court to establish procedures for the sale and auction of the property, scheduled for Aug. 15.

550 Seabreeze never finished building the Las Olas Ocean Resort, designed as a 12-story hotel with 136 rooms plus a four-story parking garage with 268 spaces and a restaurant measuring 12,000 square feet. It’s about 70 percent completed, attorney Glenn Moses of Genovese Joblove & Battista said. Moses and Paul Battista are representing the developer.

This week, 550 Seabreeze entered into an agreement with MHF Properties VI LLC, an affiliate of Magna Hospitality Group, to buy the unfinished Las Olas Ocean Resort, Moses said. Magna deposited $1.93 million into a trust account set up by the developer’s attorneys. A judge must approve Magna’s bid by July 18.

Following the August auction, 550 Seabreeze will ask the court to approve the sale to the highest and best bidder. As the stalking horse bidder, Magna would receive a $500,000 break-up fee if it is outbid. The buyer would close on the property free and clear of any liens and claims on the property.

Moses said the property has garnered significant interest from developers, whom he declined to name. The next bidder would have to offer at least $39.2 million to cover the break-up fee and the required $100,000 increments.

550 Seabreeze Development LLC purchased the property in 2003, a deed shows. The developers at one point sought EB-5 investors, raising at least $30 million from 60 EB-5 investors through December 2015. The foreclosure suit filed by Bancorp earlier this year alleges that the entities failed to finish the resort by the 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.