Less than two years after the expansive hotel opened its vibrant doors on Miami’s beachfront, lenders are planning to sell ownership of the Gansevoort South in an auction scheduled to take place next month.
Yesterday morning Credit Suisse announced that it will hold an auction for the ownership stake used to secure an $89 million mezzanine loan on the Gansevoort Hotel in South Beach. During the height of South Florida’s real estate boom, developers William and Michael Achenbaum secured the financing for the project, however their plans were quickly squashed by the past years condo market crash.
As a father-and-son team, the Achenbaums quickly put a stop to their plans to convert approximately one third of the Gansevoort’s 334 rooms into condo-hotel units after sales were incredibly pessimistic for condos in a nearby residential tower over 2008 year. Without the additional income from the halted condo development, the Achenbaums were left to rely on hotel revenue to make debt payments which they owed for construction; however that was also no easy feat.
While the Gansevoort does certainly do well amongst celebrity and party-going crowds, the Achenbaums plans to head to auction remain. Despite this event, the hotel remains open and Michael Achenbaum states, “Operations at Gansevoort South hotel remain status quo.” The hotel remains under the control of the Achenbaums’ Gansevoort Hotel Group.
Michael is optimistic about the future and hopes that he and his father will be able to buy back the loan at the auction and retain ownership. Blaming the financial woes on the condo component of the property, Achenbaum says the hotel operations are “financially profitable and capable of covering its respective debt.”
The auction is scheduled for January 28 however it does not “constitute a traditional foreclosure proceeding. Known as a UCC auction, the sale is conducted under law governing loans with equity stakes as collateral.” While other hotels are edging closer than desired to foreclosure, the Achenbaums are hoping this step is going to the right one to help them avoid what seems to be the inevitable path for high-end hotel condominiums that have been built past their potential profit margins.