Oaktree Capital Management has exited the troubled Miami Breakwater Edison hotel after its former owners filed for bankruptcy. The property was sold to a subsidiary of US jeans label, Jordache Enterprises, for $24.8 million (€15.8 million).
Jones Lang LaSalle Hotels, acting on behalf of Los Angeles-based Oaktree, said the sale was a “unique opportunity” to build a new hotel on Miami’s famous South Beach area.
The hotel was originally purchased by Robert Falor in 2004 for an estimated $17 million. In 2006, he signed up Nicky Hilton, younger sister to celebrity-socialite Paris Hilton, which would have seen the hotel redeveloped as condo-hotel units and rebranded, Nicky O.
However Falor filed for bankruptcy protection in early 2007 over a lack of financing, according to media reports, with court filings revealing that Falor’s South Beach Hotel Investors owed lender Oaktree Capital about $60 million for a mortgage and a mezzanine loan.
Jones Lang LaSalle said New York-based Nakesh Holdings, a subsidiary of Jordache Enterprises, had acquired the property, which was formerly two hotels, the Breakwater and the Edison, and which can accommodate up to 94 guestrooms.
Nakesh is expected to operate the Breakwater and Edison as traditional hotels, with reports suggesting the firm will spend more than $15 million on renovations. Jordache and Nakesh already own a hotel a few blocks away from the Breakwater Edison, with other investments in the US and in Israel, including Manhattan’s French Building on Fifth Avenue, Ruby Foo’s restaurant and bar in Times Square and the Hotel Orchid in Eilat, Israel.
Christian Charre, a senior vice president of Jones Lang LaSalle Hotels, said the hotels were an opportunity for buyers to enter a “tight market.” Barry Mukamal, the bankruptcy trustee appointed to sell the hotel, told Daily Business Review the property had a “lot of baggage attached” including the need to re-negotiate leases for two ground-floor restaurants and construction permits. “It was a troubled property,” he said.