Less than two years after the Miami Beach hotel opened, Lenders plan to sell ownership of the Gansevoort South in an auction next month.
On Wednesday, Credit Suisse announced an auction for the ownership stake used to secure an $89 million mezzanine loan on the 334-room Miami oceanfront hotel. Developers William and Michael Achenbaum secured the financing for the project at the height of the Miami Beach real estate boom, only to see their plans for the former Roney Palace roiled by the collapse of the condo market.
The Achenbaums stopped plans to convert about a third of the Miami oceanfront hotel rooms into condo-hotel units because sales were bad for the Miami Beach condos in an adjoining residential tower and in 2008. That left the father-and-son team to rely on hotel revenue to make debt payments on their construction debt, a task made even harder by what experts describe as the worst lodging downturn in a generation.
Even thought the Gansevoort, located at 2377 Collins Avenue, is in debt it still as popular as any of South Beach's most high-profile hotels. You can regularly spot celebrities at its rooftop pool.
The Miami oceanfront hotel remains open and under the management of the Achenbaums' Gansevoort Hotel Group. Michael Achenbaum said in a statement released Wednesday afternoon, "Operations at Gansevoort South hotel remain status quo''.
Achenbaum and his father hope to buy back the loan at the auction and maintain ownership. He blamed the financial problems on the Miami Beach condos component of the property and not the hotel, which the statement said is "financially profitable and capable of covering its respective debt.''
The January 28th auction announced Wednesday does not constitute a traditional foreclosure proceeding because the $89 million loan was backed by the Achenbaum ownership stake and not the Gansevoort property itself. Known as a "UCC auction,'' the sale is conducted under laws governing loans with equity stakes as collateral.
According to documents posted online by Credit Suisse's agent in the sale, Jones Lang LaSalle Hotels the Miami oceanfront hotel also has a $314 million mortgage.
Contributed by MLR Realty
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