A South Florida resort once operated by collapsed short-term rental startup Sonder was hit with a $26 million foreclosure lawsuit this month.
An entity of Emerald Creek Capital last week sued the Hillsboro Beach Resort’s ownership entities, which are controlled by Daniel Lebensohn and Gregory Freedman of Fort Lauderdale-based BH3 Management, the South Florida Business Journal reported.
The 81-key resort at 1159 Hillsboro Mile sits on a little under 2 acres.
Emerald Creek loaned $26 million to the owners of the resort in 2022. The lawsuit accuses the owners of defaulting in March 2024 when they allegedly failed to pay real estate taxes. The lender paid $731,000 to cover the taxes and later paid another $2.19 million in taxes.
The loan wasn’t repaid when it matured in August, the lawsuit alleges. A forbearance agreement expired Jan. 1 without repayment, it alleges. The debt amounts to $321,000 per key.
The hotel “is an oceanfront gem,” a spokesperson for the owners told the outlet. Increased interest rates and the Sonder bankruptcy in November were cited as challenges, and it’s likely the ownership hasn’t been able to refinance. The owners are still trying to work it out with their lender, the spokesperson said.
Lebensohn and Freedman developed the 70,800-square-foot Hillsboro Beach Resort in 2021.
Their BH3 Management isn’t part of the lawsuit. The firm’s projects include an 844-unit, two tower multifamily development in Fort Lauderdale’s Flagler Village and a 250-unit Hallandale Beach condo conversion, in partnership with Ari Pearl’s PPG Development.
Sonder’s meltdown allegedly caused “chaos” at its hotels in Manhattan and left Los Angeles short-term rental owners in a bind.
The company filed for bankruptcy and folded after last-ditch moves that included a short-lived partnership with Marriott.
New Orleans was the market hardest-hit by Sonder’s wipeout, with 32 affected properties, according to TRD Data. But Miami, Orlando, Palm Springs and Boca Raton were also among the startup’s markets.
— Rachel Stone