Some South Florida hotels managed to keep occupancy high over the past year, but experienced other hurdles: Lenders’ scant appetite for hospitality during the pandemic left owners with few options for refinancing.
The Grand Hotel Fort Lauderdale fell into this conundrum. It just scored the refinancing needed to resolve a lender’s foreclosure lawsuit that was filed after the hotel missed its mortgage principal payment due date in February.
Sheridan Capital, a subsidiary of FM Capital, issued the refinancing. Aaron Kurlansky and Joe Back of Sheridan structured the loan.
The previous lender, Universel Hotel, had sued the 196-key Grand for $10.1 million, which breaks down to $9.5 million in principal; $33,646 in past due interest; and $540,575 in default interest, according to the complaint. Universel filed for foreclosure in June in Broward Circuit Court.
The Grand Hotel, at 4900 Powerline Road, stayed open throughout last year, maintained a roughly 80 percent occupancy and met its loan obligations, said Yeshaya Averbuch, a co-managing member of hotel owner 4900 Powerline LLC. Sender Kohl is the other co-managing member.
Issues arose once it came time to refinance near its loan maturity date, as “all typical lenders had shied away from hospitality,” Averbuch added.
“Despite the hotel’s performance, it just wasn’t palatable to most lenders to look at hospitality. Currently, the appetite is still not what it was in 2018 and ‘19,” Averbuch said.
The hotel fared well last year because of in-state tourism, as well as newcomers who were testing the regional job market but had not yet found a permanent home. This persisted this year, with first quarter occupancy at 92 percent, Averbuch said.
The Grand, with 50 suites and 146 standard rooms, is not a long-term stay hotel but offers stays by the night. Rates for a one-night stay in August range from the low $70s to high $70s per room, according to its website.
4900 Powerline LLC bought the property, built in the 1970s, for $13 million in 2018, property records show. It then invested $3.5 million in capital improvements, Averbuch said.
The $11 million refinancing covered the outstanding balance in the foreclosure action as well as closing costs and interest, leaving some funds in reserves, according to Kurlansky.
Sheridan Capital opted to refinance the Grand in part because as a local lender, it was comfortable with the property location, he added. Hollywood-based Sheridan is a bridge lender offering loans from $5 million to $50 million, with interest rates ranging from 6 percent to 8 percent.
Although the Grand was able to resolve its financial woes, other South Florida hotels have not been as fortunate. Faced with an “aggressive foreclosure” by its lender, the Aloft Miami Brickell hotel filed for Chapter 11 bankruptcy this summer.
The filing came on the heels of the Holiday Inn in downtown Miami also filing for bankruptcy protection, in a push to attract investors to redevelop the site.