The Real Deal Miami

Stalking horse bidder to buy planned Fort Lauderdale Beach hotel

An auction was canceled because the affiliate of Magna Hospitality Group was the only bidder for the site
By Keith Larsen | August 13, 2018 05:30PM

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

A failed Fort Lauderdale Beach hotel project is closer to being sold to a Magna Hospitality Group affiliate for $39.1 million after a previously scheduled auction in August was cancelled.

The auction was nixed after the planned 12-story, 136-room Las Olas Ocean Resort at 550 Seabreeze Boulevard failed to receive any qualified bids except for one from a stalking horse bidder, MHF Properties VI LLC, an affiliate of Magna Hospitality Group.

Glenn Moses of Genevese Joblove & Battista, who represents the project’s development group, 550 SeaBreeze LLC, said the group is now seeking bankruptcy court approval for the sale on Friday and expects a closing by the end of August.

550 Seabreeze Development LLC purchased the property in 2003, property records show.

The group sought EB-5 investment, a federal program in which foreign investors can invest $500,000 into certain projects in exchange for U.S. residency, to finance the project. It raised at least $30 million from 60 EB-5 investors through December 2015.

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

In addition to a foreclosure lawsuit, the development group’s principals Ray Parello, Ken Bernstein, Jack Kessler and Eugene Kessler face another lawsuit from 21 EB-5 investors who allege they were misled into investing in the project.

In July, the hotel project secured a stalking horse bidder for $38.6 million by an affiliate of Magna Hospitality Group, which was then increased to $39.1 million. If the court approves the sale, the buyer would be able to close on the property free and clear of any liens and claims on the property.