Miami Beach hotel heads to foreclosure auction
Borrower owes nearly $32M, including legal fees and interest, judge rules
UPDATED, May 24, 1:30 p.m.: The owners of the Variety Hotel are almost out of options.
The property, at 1700 Alton Road, is heading to a foreclosure auction July 14, nearly a year after a company tied to BridgeInvest filed a foreclosure lawsuit against AC 1700 Alton Owner LLC over an allegedly unpaid $25 million loan. Adam Verner of New York-based Springhouse Partners and Chaim Cahane of Forte Capital Management control the borrowing entity.
The auction was originally scheduled for June 7 but was delayed on Monday, according to a spokesperson for the lender’s lawyer.
The borrower now owes nearly $32 million, including legal fees and interest, to the BridgeInvest affiliate, BI 44 LLC, according to Miami-Dade Circuit Court Judge Michael Hanzman’s final judgment.
The 68-key hotel was renovated and converted into a hotel. The property, built in 1923, opened recently, according to hotels.com.
The original lawsuit filed in June 2020 alleged the developer hadn’t made payments since April, just weeks after hotels were ordered shut in Miami-Dade County as a result of Covid-19.
In August, the owners listed the property for sale asking $36.5 million. The hotel features a lobby restaurant and bar, a courtyard with a swimming pool, and ground-floor retail space. The Mediterranean revival-style building was formerly known as the Mayflower Hotel.
In a counterclaim filed earlier this year, the contractor, By His Grace Construction, alleged the lender would be “unjustly enriched” from the foreclosure sale of the property. BHG alleged that BridgeInvest included “an improper and inflated balance” owed to BHG on the note.
Attorney Isaac Marcushamer of Mark Migdal & Hayden, who represents the lender, said he is unaware if the borrower is still trying to sell the property before it goes to auction, though it is possible.
Cahane of Forte declined to comment.
The foreclosure is one of a few such hotel cases to head to an auction sale. Investors raised hundreds of millions of dollars during the pandemic in the hopes of acquiring distressed hotels, but the South Florida market has started to recover sooner than many expected.
The Variety is across the street from a Trader Joe’s-anchored mixed-use project developed by Rock Soffer of Turnberry Associates, Elion Partners and members of the Sredni family.