Miami Beach’s Shore Club hotel has certainly seen sunnier days. The swank SoBe hot spot recently went delinquent on its $111.5 million mortgage, leaving the future of the hotel unknown.
Owners of The Shore Club, and New York developers, Philip Pilevsky and his son Michael, have reportedly “withdrawn a threat to close the hotel after we agreed to fund payroll and critical expenses,” says a special servicer who is overseeing the mortgage. The special servicer, Cerberus Capital Management LP’s LNR Partners Inc., declined to further comment on the situation, however, according to a credit-research company, Trepp LLC, the Shore Club is 30 days delinquent this month, and the hotel has an additional $11.5 million of debt on it.
The now-70-year-old hotel was bought by the Pilevsky’s in 1997 in partner with Jane Forbes Clare, an heiress of the Clark family that founded the I.M. Singer Co. sewing machine company. The hotel was renovated in 2001 and a third tower was added before being appraised for $176 million in 2005. The infamous South Beach hotel features 322 rooms, a spa, several nightclubs, and the delectable Nobu sushi restaurant.
Like many hotels as of late, the Shore Club has suffered severely from potential guests deciding against lavish vacations, ultimately declining the hotels occupancy rates and revenue. The Shore Club posted occupancy of 54 percent in this year’s second quarter, which is a perceptible drop from the 66.5 percent reported a year earlier. At the same time, the hotel saw its revenue per available room drop 40 percent from $251.17 to $151.44 resulting in LNR reporting the hotel had a shortfall of cash in September, specifically in terms of generating revenue between $1.3 million and $1.4 million against their $1.7 million in expenses.
A spokesperson for the Pilevsky’s said that they are in talks with LNR to resolve the situation. “A renovation of the hotel is in process, and there is a disagreement between the owner and the loan servicer regarding the servicer’s funding obligations,” said the spokesperson.