Penn-Florida Companies has set the stage for an auction of its Mandarin Oriental hotel development site in Boca Raton, though it’s still angling for a recapitalization or refinancing.
Boca Raton-based Penn-Florida’s affiliate filed proposed bid procedures this week for its 1-acre site where the 12-story, 164-key Mandarin Oriental is under construction, the South Florida Business Journal reported. The firm’s attorney, Bradley Shraiberg, said the development is in “advanced stages,” with several prospective investors and lenders.
A refinancing or a recapitalization could still void an auction.
Bankruptcy Judge Erik Kimball in West Palm Beach is yet to approve the proposed bid procedures. If he signs off, the bid deadline will be June 18, and the auction will be June 22.
Penn-Florida affiliates Via Mizner Owner II and Via Mizner Pledgor II filed for Chapter 11 reorganization on the hotel development site at 103 East Camino Real in December.
The affiliates owe $130.2 million to main creditor TIG Romspen US Master Mortgage, which is listed as a Cayman Islands limited partnership with an office in Toronto. It also has $24.6 million in unsecured debt claims and an $80 million secured claim from Tequesta-based Via Mizner Funding.
The hotel is topped off and structurally completed, Penn-Florida said in a December news release about the bankruptcy filing.
The Mandarin Oriental hotel is part of a larger Boca Raton development by Penn-Florida, a firm led by Mark Gensheimer that has faced financial headwinds in recent years on several of its properties.
Its loans were “in good standing” and provided low leverage from 25 percent to 50 percent loan-to-value, though some were bought by “opportunistic” groups that hoped to either seize the properties and “realize a significant profit,” though Penn-Florida paid off its debts, the firm told The Real Deal in February.
Penn-Florida’s troubles came as interest rates increased over the past four years, lenders retrenched, and South Florida developers and landlords felt the sting from higher insurance costs.
Last year, Penn-Florida filed for bankruptcy on the 14-story, 366-unit apartment building at 101 East Camino Real in Boca Raton, narrowly avoiding a Uniform Commercial Code foreclosure auction that was scheduled for the same day as the Chapter 11 reorganization filing. Penn-Florida was able to keep a stake in the property after Grant Cardone, a multifamily syndicator and social media personality, partnered on the $235 million building purchase.
The Boca Raton Mandarin Oriental project also includes an 88-unit condo building at 105 East Camino Real. It hasn’t been subject to foreclosures or bankruptcy filings, but a few buyers angered by construction delays sued for a return of their deposits.
Last year, Penn-Florida sold a vacant Boca Raton assisted living facility development site for $27 million, paying off its debt that was subject to a lender foreclosure.
Another lender dismissed its foreclosures against two Boca Raton office buildings last year after investor James Batmasian took over Penn-Florida’s interest in the properties’ ownership entities, records show.
–– Lidia Dinkova
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Map: Tracking Penn-Florida’s woes as its Mandarin Oriental condo takes shape