|By Douglas Hanks, The Miami
HeraldMcClatchy-Tribune Regional News
Dec. 9, 2009--Lenders plan to sell ownership of the Gansevoort South in an auction next month, less than two years after the hotel opened as a popular stop on Miami Beach's party circuit.
Credit Suisse on Wednesday morning announced an auction for the ownership stake used to secure an $89 million mezzanine loan on the 334-room oceanfront hotel. Developers William and Michael Achenbaum secured the financing for the project at the height of South Florida's real estate boom, only to see their plans for the former Roney Palace roiled by the collapse of the condo market.
Sales were dismal for condos in an adjoining residential tower and in 2008, the Achenbaums halted plans to convert about a third of the hotel rooms into condo-hotel units. 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.
Despite its troubled debt, the Gansevoort, located at 2377 Collins Ave., enjoys as much buzz as any of South Beach's most high-profile hotels. Celebrities are regularly spotted on its sprawling rooftop pool, which The New York Times last weekend called South Beach's "of-the-moment spot."
The Gansevoort could be the leading edge of what analysts predict will be a wave of banks seizing hotels throughout South Florida next year.
With defaults rising on hotel loans, lenders are under pressure to foreclose on the properties and clean up their balance sheets. And with room revenues predicted to drop again in 2010 throughout South Florida, those owners reaching into their pockets to make hotel loan payments say they're not willing to fund losses indefinitely.
Because the $89 million loan was backed by the Achenbaum ownership stake -- and not the Gansevoort property itself -- the Jan. 28 auction announced Wednesday does not constitute a traditional foreclosure proceeding. Known as a "UCC auction," the sale is conducted under laws governing loans with equity stakes as collateral.
The hotel also has a $314 million mortgage, according to documents posted online by Credit Suisse's agent in the sale, Jones Lang LaSalle Hotels.
Michael Achenbaum and a Gansevoort spokeswoman could not be reached for comment Wednesday morning. A call placed to Credit Suisse's media office was not returned early Wednesday morning.
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