Lender files to foreclose on new South Beach hotel

Miami /
Jun.June 12, 2020 01:30 PM
BridgeInvest Alex Horn, Variety Hotel at 1700 Alton Road in Miami Beach

BridgeInvest Alex Horn, Variety Hotel at 1700 Alton Road in Miami Beach

A lender filed a foreclosure lawsuit on a hotel in South Beach, in a possible sign of things to come.

A company tied to BridgeInvest sued the owner of the 70-key Variety Hotel, which is yet to open at 1700 Alton Road in Miami Beach. The suit alleges the hotel owner failed to make payments on a $25 million loan since April. BridgeInvest alleges the loan is in default and is seeking the entire principal amount of the loan plus interest.

“We remain open to discussions, but lenders can’t be expected to sit forever and wait,” said Isaac Marcushamer of the Miami-based law firm Mark Migdal & Hayden who represents the lender.

He added, “In normal times, pre-pandemic, if people missed payment, 30 to 45 days later you are looking at a lawsuit being filed.”

Jeff Schneider of Levine Kellogg Lehman Schneider and Grossman, who represents the hotel owner, said he does not believe the borrower is in default.

“We believe that this is a manufactured case,” Schneider said. “We don’t believe it is going to last long, and we are going to vigorously defend it.”

In 2015, Adam Verner of New York-based Springhouse Partners and Chaim Cahane of Forte Capital Management partnered on the deal to purchase the property for $21 million.

At the time, the building, originally built in 1923, was a mixed-use property with retail and apartments. BridgeInvest provided the loan to the development group in March 2019 to redevelop the property into the Variety Hotel, which is planning to open this year. According to the hotel’s website, reservations begin in September.

BridgeInvest is a Miami-based lender that specializes in providing short-term, senior position commercial real estate loans in the Southeast and Central U.S, according to its website.

The coronavirus pandemic has caused hotel occupancy to drop to record lows and many hotel owners are struggling to meet their occupancy costs and debt service payments. In April, South Florida’s hospitality industry had to meet $4 billion in commercial mortgage-backed securities (CMBS) payments, a type of debt that is more difficult to rework than traditional bank financing.

In South Florida, few foreclosure lawsuits have been filed during the pandemic. Earlier this month, Wells Fargo filed suit against Southland Mall in Cutler Bay, alleging that the mall owner is in default on its $65 million loan.


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