The new owners of an embattled Fort Lauderdale Beach hotel project just secured a $51.5 million loan to complete construction of the building.
A company tied to Rhode Island-based Magna Hospitality Group can now finish the 12-story, 136-room hotel at 550 Seabreeze Boulevard, known as Las Olas Resort, that is about 70 percent complete.
The project came to a halt in January after Bancorp Bank filed a foreclosure suit of $37.6 million against the previous owners. The development group then filed for Chapter 11 bankruptcy in February, which allowed Magna Hospitality to buy the property at auction.
The previous development group, led by Ray Parello, Ken Bernstein and Jack and Eugene Kessler, were longtime associates or employees of Turnberry Associates, the Aventura-based development group led by the Soffer family. About $30 million of the project’s initial financing came from 60 EB-5 investors, a federal cash for visa program.
More than 20 of these EB-5 investors are now suing the former development group, alleging that it misled them on the project.
Magna Hospitality is a privately held hotel real estate investment firm that owns and operates more than 20 hotels, according to its website. The company did not immediately respond to a request to comment.
Because Magna Hospitality acquired the property out of bankruptcy, it is not responsible for any liens or claims, including any of the EB-5 fallout, according to court documents. Though the project is more than 70 percent completed, court documents show it could require another year of construction.
Rhode Island-based company Magna will use the same contractor and many of the same subcontractors on the remaining work. Magna has agreed to comply with certain reporting guidelines that will assist the EB-5 investors, but only in obtaining their visas.