Filed under: Luxury Travel & Hotels
Miami's beautiful Gansevoort South hotel is the latest hotel in trouble. The Miami Herald is reporting that Credit Suisse has announced a January 28 auction for the ownership stake that was once used to obtain $89 million mezzanine loan on the hotel. Developers William and Michael Achenbaum got their financing at the top of South Florida's real estate bubble, hoping to make a fortune on condo units. But sales were sluggish for the condos in the residential tower and the Achenbaums decided not to convert some of the hotel rooms into condo-hotel units. Because of the real estate downturn the developers were forced to rely on hotel revenue to pay back their debt at a time when tourism has been experiencing some of its worst numbers ever.
The 334-room oceanfront hotel hasn't been empty. The enviable location and sharp design have attracted a lot of attention. It has been used as a backdrop in the Bravo reality show Miami Social and was reportedly a hot spot during the recent Art Basel Miami Beach show. The hotel remains open and busy as the winter season begins.
The Miami Herald article says that the Achenbaums hope to find a way to buy back the loan at the auction and retain ownership. The $89 million loan was backed by the Achenbaum ownership stake not the Gansevoort property itself so the auction is not a traditional foreclosure proceeding. The hotel also has a separate $314 million mortgage. Any winner in the auction would also have to take on that mortgage.
Before it was the Gansevoort South, the building was the Roney Palace and the adjoining Roney condo complex. That project went through bankruptcy in 2004 and Chicago developer Joseph Chetrit paid about $150 million for the property months after the Chapter 11 filing, eventually selling his company's interest to the Achenbaums after a failed joint venture between the two groups.
Gallery: Gansevoort South