The Fontainebleau Miami Beach is a magnificent combination of Miami’s glamorous past and chic modern luxury. However, the $1 billion renovation that revived the historic hotel back to stardom might also be its kryptonite.
With about $60 million in unpaid contractor claims, and $670 million in construction debt, Fontainebleau was able to reach a 45-day agreement with lenders not to declare default—however, that extension agreement expired on August 31. As Fontainebleau did not preserve proper reserves for the $60 million in construction liens for the hotel, it has allegedly violated terms of the loan. Although spokespersons for the hotel claim it is in negotiations with its lenders and has not missed a loan, the diagnosis of the situation is grim. But, keeping an optimistic outlook is COO of Fontainebleau Resorts Howard Karawan, who remarked, “While this tough economy has created challenges that we are actively addressing with our lenders, Fontainebleau Miami will continue to provide an outstanding experience to its guests for many years to come.”
In addition to the Fontainebleau Miami’s woes, the hotel’s principal owner, Jeffrey Soffer is battling bankruptcy with the Fontainebleau Las Vegas. The Vegas deal is paralyzed in construction stages because its lenders pulled the plug on all funds. As of now the Fontainebleau Las Vegas is not able to spend any cash during its Chapter 11 bankruptcy proceedings.