Bankruptcy court finally approves sale of Fort Lauderdale hotel project

Rhode Island-based hospitality company paying $39.1M for the unfinished 12-story, 136-room hotel

Miami /
Aug.August 17, 2018 02:45 PM

550 Seabreeze Hotel project in Fort Lauderdale BeachRobert Indeglia, co-founder of Magna Hospitality Group (Credit: Straticon)

A U.S. Bankruptcy Court just approved the sale of the unfinished 550 Seabreeze Boulevard hotel in Fort Lauderdale Beach to a subsidiary of Magna Hospitality Group for $39.1 million.

The approval comes days after the project failed to receive any qualified bidders for the planned 12-story, 136-room hotel, canceling the auction last week. Glenn Moses and Paul Battista of Genovese Joblove & Battista represented the development group, 550 Seabreeze Development.

The Rhode Island-based hospitality company plans to begin construction once it officially closes on the property later this month.

Under an agreement reached between the parties, Magna plans to use the same contractor and many of the same subcontractors to complete the project. It has also agreed to comply with certain reporting guidelines that will assist the EB-5 investors who helped finance the project in obtaining their visas.

The developer originally purchased the property in 2003 with plans to build the Las Olas Resort.

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. But the project ran into financial trouble and in January of this year, Bancorp Bank filed a foreclosure suit against 550 Seabreeze Development LLC, alleging default on a loan with an unpaid balance of $36.9 million.

Then in June, the development group filed a motion in bankruptcy court to establish procedures for the sale and auction of the property, scheduled for Wednesday, Aug. 15. Magna Hospitality Group emerged as the stalking horse bidder in July. By purchasing the property out of bankruptcy, the buyer can close on the property free and clear of any liens and claims.

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.

The 550 Seabreeze hotel is another example of the challenges facing the EB-5 investment program. Earlier this month, the Securities and Exchange Commission charged a Palm Beach developer, EB-5 regional center and its managing director of defrauding foreign investors in a failed hotel-condo development. The company behind the unfinished Palm House Hotel, 160 Royal Palm Way, also filed for Chapter 11 bankruptcy with creditors claims totaling $115 million.


Related Articles

arrow_forward_ios
An aerial photo of Boca Lago Golf & Country Club (Google Maps, iStock)
Boca Lago Golf & Country Club owner wins approval to build a hotel on the property
Boca Lago Golf & Country Club owner wins approval to build a hotel on the property
Westime owner Jean Simonian and Washington Park Hotel. (Facebook via Westime and Washington Park Hotel)
Ladder Capital sells Witkoff’s Miami Beach hotel for $44M
Ladder Capital sells Witkoff’s Miami Beach hotel for $44M
Renderings of the One Brickell project with Jorge Pérez  and Jon Paul Pérez (Photos via Wikipedia Commons, Related)
Related to partner with Baccarat on major Brickell high-rise development
Related to partner with Baccarat on major Brickell high-rise development
Deepak Khosa and Aaron Kurlansky with 123 Ocean Avenue, Palm Beach Shores (Google Maps, iStock)
Deepak Khosa closes on distressed hotel on Singer Island, plans to convert to multifamily
Deepak Khosa closes on distressed hotel on Singer Island, plans to convert to multifamily
Ocean Bank CEO A. Alfonso Macedo and 4238 to 4242 Northwest Seventh Street (Google Maps)
Ocean Bank sells Miami dev site for $14M, buyer plans mixed-use project
Ocean Bank sells Miami dev site for $14M, buyer plans mixed-use project
Valerio Spinaci and 1506 Collins Avenue (Google Maps)
Casa Hotels buys boutique South Beach hotel for $8M
Casa Hotels buys boutique South Beach hotel for $8M
An aerial shot of the condos at 2020 North Ocean BLVD. (30-thirty)
Cavache taps Douglas Elliman to sell remaining units at 30 Thirty North Ocean in Fort Lauderdale Beach
Cavache taps Douglas Elliman to sell remaining units at 30 Thirty North Ocean in Fort Lauderdale Beach
Ari Pearl, Jonathan Leifer and 9540 West Bay Harbor Drive. (Wyndam Hotels, PPG Development, L3C Capital Partners)
Ari Pearl, Jonathan Leifer acquire Bay Harbor Islands hotel out of foreclosure
Ari Pearl, Jonathan Leifer acquire Bay Harbor Islands hotel out of foreclosure
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...