Party’s over: Clevelander South Beach closes after employee tests positive for Covid

The Clevelander South Beach closed over the weekend after an employee tested positive for Covid-19, a month after reopening.

The closure comes as the commercial mortgage-backed securities loan backing the hotel is in special servicing.

A spokesperson for the 60-key hotel at 1020 Ocean Drive in Miami Beach confirmed that one employee tested positive “with concern there could be more.” The hotel closed on Saturday “in an abundance of caution” due to the record number of Covid-19 cases in South Florida, the spokesperson said. Miami is considered a new epicenter of the coronavirus pandemic.

“Given current conditions we simply cannot ensure the safety and wellbeing of our guests, customers and team members, which remains our top priority. We are determined to get back to doing what we do best as soon as it is safe to do so,” a statement from the hotel said.

Jesta Group, a Canadian-based investment company, owns the Clevelander. The CMBS loan, whose original amount was $32.5 million when it was provided by UBS in October 2018, is more than two months delinquent, according to data from Trepp. The loan’s balance when it was sent to special servicing was $18.4 million.

The Clevelander’s spokesperson did not immediately respond to a request for information about the loan’s status.

Like other hotel owners, Jesta requested Covid-19 relief from its lender in April, and by June, the loan was transferred to special servicing “due to imminent monetary default,” according to Trepp. Jesta is being represented by a third-party consultant in its negotiations with the special servicer.

The iconic South Beach hotel had reopened to guests June 5 with its “Cleve Cares” program, which included limiting access to public spaces and reduced restaurant capacity. Guests were also required to wear masks at all times and practice social distancing, according to a reopening release. Last week, due to a growing number of cases in South Florida, Miami-Dade County Mayor Carlos Gimenez ordered restaurants’ indoor dining rooms closed.

Many hotels have waited to reopen, despite being allowed to operate as of June 1. Restaurants are also increasingly closing voluntarily due to the surge in cases. As of Monday, there were 12,624 new cases of Covid-19 in Florida, for a total of 282,435 cases statewide.

During a virtual press conference on Monday, Gimenez said he “had no intention” of going further with restrictions but that “everything is on the table.”

Staff at the Clevelander were required to wash or sanitize their hands every 30 minutes, and all team members were screened daily, according to the release.

In 2018, Jesta acquired the Art Deco property, built in 1938, for $20.6 million. It was part of a larger $28.5 million deal that included the adjacent Essex House.

Of the South Florida CMBS hotel loans in special servicing, Fontainebleau Miami Beach’s nearly $1 billion loan is at the top of the list. Soffer’s Fontainebleau Development has remained current on its payments, but is seeking modifications to the loan documents, according to Trepp.