CGI Merchant loses downtown Miami Gabriel hotel in UCC auction

CGI Merchant Group lost its downtown Miami hotel in a UCC auction, marking the second time this week the firm parted with one of its properties due to debt woes. 

Coconut Grove-based CGI Merchant, led by founder and CEO Raoul Thomas, has been fighting foreclosure filings by lenders on three of its biggest hotels this year. Issues partly stem from elevated interest rates and Florida’s skyrocketing insurance premiums. Despite losing two of its hotels this month, CGI has vowed to continue fighting to regain ownership of the properties. 

On Monday, an affiliate of Josh Zegen and Brian Shatz’s Madison Realty Capital took over the 129-key Gabriel Miami Downtown at the luxury Marquis condo tower at 1100 Biscayne Boulevard. The hotel is on the first 14 floors of the 67-story building, which also has 292 condos. 

New York-based Madison had refinanced an existing $60 million loan CGI had on the hotel in 2021, boosting it to $60.4 million, according to records. As the lender, Madison likely acquired the Gabriel through a credit bid at the UCC, or Uniform Commercial Code, auction. 

CGI had been working to recapitalize the loan and was in talks with potential debt partners, sources told The Real Deal in May. Madison originally had scheduled the auction for May, but extended it several times. This is generally indicative that lenders and borrowers are in talks and are trying to find a workaround to a foreclosure auction.  

Monday’s auction, however, wasn’t postponed. 

“Unfortunately, against our expectation, Madison decided not to grant us an extension,” CGI said in a statement.  

Now, CGI is working toward taking back the property by purchasing the outstanding loan balance, the firm said. 

“Our sole objective is to reach an amicable financial settlement,” GGI said in its statement, adding that it’s “in close communication” with Madison. “We are working closely with a key capital partner and have solidified a capital solution that will aid with the financing of the Gabriel Downtown Miami.”

Madison Realty declined to comment. 

CGI bought the Marquis tower’s hotel and common areas, such as restaurant space, in 2013. Records show the price was $19.5 million, though it was reported as $37.5 million. The higher amount likely was reflective of the additional cost for fixtures and furniture. 

At the time, the hotel was branded Casa Moderna. CGI Merchant switched it to the Spanish ME by Meliá brand, and later to the Gabriel brand. 

In 2014, CGI took out a $24.5 million loan on the hotel, boosting it several times in subsequent years, records show. The debt was reassigned several times to different lenders. 

In Washington, D.C., CGI is fighting to take back its Waldorf Astoria hotel after the lender, merchant bank BDT & MSD Partners, took over the property through foreclosure on Monday. Last year, CGI allegedly defaulted on a $285 million loan on the hotel, after purchasing the leasehold interest on the property in 2022 for $375 million from Donald Trump’s family firm. 

In South Beach, CGI also faces a UCC foreclosure on the seven-story, 132-key Gabriel South Beach at 620, 626, 640 and 650 Ocean Drive. That foreclosure is tied to a $71.1 million loan on the property from Deutsche Bank. The auction date also has been postponed several times, indicating that the borrower and lender are in talks to find a workaround.

Most recently, the Gabriel South Beach auction date was pushed back to Sept. 12.