Inside Penn-Florida’s Boca Raton Portfolio Debt Woes

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As two long-delayed high-profile projects head to the finish line in Boca Raton, details of the financial and legal problems that slowed their development are coming to light.

Mark Gensheimer’s Penn-Florida unveiled ambitious plans for Boca Raton a decade ago. The firm, already an office owner in the city, was pursuing an assisted living facility. It unveiled plans in 2015 for its marquee Mandarin Oriental condominium and hotel in a gushing news release.

But over the past two years, Penn-Florida faced foreclosure suits on two of its office buildings and the assisted living development site, which is vacant. It filed for bankruptcy on the unfinished Mandarin Oriental hotel in December; it has also confronted lawsuits from Mandarin Oriental condo buyers angered by its delayed completion. The branded hotel and condo originally were slated to be finished in 2017. The firm also went through bankruptcy for another project, an apartment building at Via Mizner, its mixed-use Boca development that also includes the branded condos and hotel. It managed to keep a stake in the property after partnering with multifamily syndicator and social media personality Grant Cardone.

Penn-Florida attributed the woes to post-pandemic headwinds and bad timing for loan maturations.

Its debts provided low leverage, ranging from 25 percent to 50 percent loan-to-value, and were “in good standing” when they matured, the company said in a statement. But three of the matured debts were purchased by “opportunistic” loan buyers who immediately pursued foreclosures “hoping to take ownership of the properties and realize a significant profit,” though Penn-Florida paid off each debt in full through capital restructuring, refinancing or property sale.

For years, record commercial and residential leasing suggested South Florida’s tri-county region was immune to issues facing most other markets. But Penn-Florida’s saga shows the challenges landlords and developers in South Florida now face: retrenching financiers, tighter lending standards and illiquid markets, elevated interest rates and mounting construction and insurance costs –– all factors Penn-Florida cited for its troubles.

Still, construction of the Mandarin Oriental condos now is expected to wrap up this year, followed by the hotel shortly after, Penn-Florida said. Not defeated by the distress, the firm has queued up another marquee mixed-use project, University Village.

That development, near Florida Atlantic University’s Boca Raton campus, is planned with 829 residential units, including apartments, for-sale homes, an assisted living facility, as well as a hotel, offices, retail space and trails. It obtained master plan approval, and its site plan application is pending.

Here is more about Penn-Florida’s debt troubles of the past two years.

Mandarin Oriental hotel

Penn-Florida filed for bankruptcy in December on the 12-story, 164-key hotel that’s under construction at 103 East Camino Real.

Its senior secured lender, TIG Romspen US Master Mortgage, provided a $140 million loan in 2021. Penn-Florida defaulted on it at its 2023 maturity, court records show.

A restructuring agreement in collaboration with its lender calls for the refinancing or sale of the property. Penn-Florida requested approval for the sale procedures last Wednesday, though it said it is doing so out of an abundance of caution in case a refinancing doesn’t work out.

TIG Romspen is listed as a Cayman Islands limited partnership with an office in Toronto, Canada.

Among the unsecured claims listed in the bankruptcy filing is one from Mandarin Oriental in Marietta, Georgia for $502,600 marked as “disputed.”

In Palm Beach Circuit Court, Penn-Florida’s affiliate faces lawsuits from five project contractors. The contractors are required by state law to sue “to protect their lien rights,” Penn-Florida said.

The hotel is topped off and “structurally” finished, Penn-Florida said in a December news release about its bankruptcy filing.

Mandarin Oriental condo

The 88-unit condo building at 105 East Camino Real hasn’t been the subject of lender foreclosures or Chapter 11 reorganizations.

The building, slated for completion this summer, is substantially presold, Penn-Florida’s release says. But the yearslong delays have angered buyers, with eight open suits against Penn-Florida’s affiliate filed by buyers seeking their deposits back.

Although Penn-Florida declined to comment on the pending litigation, only saying the purchase and sale agreements have been and will be honored, in court filings it has argued that the PSAs made it clear that the developer isn’t obligated to substantially finish the project by the anticipated completion date and that construction may be extended due to unavailability of labor, materials and financing, among other hurdles.

101 Via Mizner

The 14-story, 366-unit apartment building at 101 East Camino Real is the only building Penn-Florida completed at its Via Mizner project.

The firm finished the project, called 101 Via Mizner, in 2016.

Penn-Florida’s affiliate filed for Chapter 11 reorganization on the property in January of last year, on the same day the property was due to go up for a Uniform Commercial Code foreclosure auction. Blackstone Mortgage Trust previously sought UCC foreclosure on a $145 million loan.

Penn-Florida paid off the debt last year after it partnered with Cardone on the $235 million purchase of the property. Cardone’s affiliate paid $220 million, and Penn-Florida’s entity covered the $15 million balance, according to court filings.

Despite court records at the time saying the joint venture may convert the rentals into condos, Penn-Florida said there’s no such plan currently.

101 Via Mizner is more than 90 percent occupied, according to Penn-Florida.

Assisted living site

Penn-Florida planned a 193-unit assisted living facility on the 1-acre property at 375 East Royal Palm Road.

The firm paid $1.2 million for the site and adjacent properties in 2005, records show.

It borrowed $2.5 million on the land in 2016 from City National Bank of Florida, increasing the loan to $5.7 million in three loan modifications in subsequent years.

In 2024, City National Bank of Florida reassigned the loan to an affiliate of Miami Beach-based distressed debt investor Safe Harbor Equity, which filed for foreclosure against Penn-Florida on the $5.7 million loan, alleging default on the 2024 maturity. The foreclosure also was against Gensheimer, the loan’s guarantor.

Penn-Florida demolished the two-story building on the site but never started construction of the assisted living center. It sold the land to Boca Raton-based SobelCo in October for $27 million, paying its debt and settling the foreclosure.

Boca Raton offices

In 2024, a Penn-Florida affiliate was hit with two foreclosure lawsuits on a pair of Boca Raton office buildings.

An affiliate of Kore Capital sued over the $9.6 million balance on three loans for the seven-story, 33,100-square-foot office building at 101 North Federal Highway and the $10.8 million balance on a debt for the the five-story, 40,200-square-foot building at 1 North Federal Highway, according to Palm Beach Circuit Court filings.

Penn-Florida developed the 101 North Federal Highway building, completing it in 2003, and paid $8.8 million for the 1 North Federal Highway building and surrounding properties, records show.

Kore Capital alleged Penn-Florida defaulted on the maturity of three loans for 101 North Federal, originally issued by City National Bank of Florida in 2016, 2018 and 2020 for $9.2 million, $1.5 million and $1.4 million, respectively, according to court filings. The lender also alleged Penn-Florida defaulted on the maturity of a $13.8 million loan, originally issued by City National Bank of Florida in 2016.

Both suits named Gensheimer as a defendant.

Kore Capital had both suits dismissed in May, after Boca Raton-based real estate investor James Batmasian took over Penn-Florida’s ownership entities for the buildings, according to court and state corporate records. The sale price wasn’t public.

Batmasian leads Investments Limited.

Penn-Florida said the loans were fully repaid but declined to say how much Batmasian paid for the properties.