A failed Fort Lauderdale Beach hotel project is closer to being sold to a Magna Hospitality Group affiliate for $39.1 million after a previously scheduled auction in August was cancelled.
The auction was nixed after the planned 12-story, 136-room Las Olas Ocean Resort at 550 Seabreeze Boulevard failed to receive any qualified bids except for one from a stalking horse bidder, MHF Properties VI LLC, an affiliate of Magna Hospitality Group.
Glenn Moses of Genevese Joblove & Battista, who represents the project’s development group, 550 SeaBreeze LLC, said the group is now seeking bankruptcy court approval for the sale on Friday and expects a closing by the end of August.
550 Seabreeze Development LLC purchased the property in 2003, property records show.
The group sought EB-5 investment, a federal program in which foreign investors can invest $500,000 into certain projects in exchange for U.S. residency, to finance the project. It raised at least $30 million from 60 EB-5 investors through December 2015.
In January, Bancorp Bank filed a foreclosure suit against 550 Seabreeze Development LLC and Jaw of 515 Seabreeze LLC, alleging default on a mortgage with an unpaid principal balance of $36.9 million. Last month, the development group filed a motion in bankruptcy court to establish procedures for the sale and auction of the property, scheduled for Aug. 15.
In addition to a foreclosure lawsuit, the development group’s principals Ray Parello, Ken Bernstein, Jack Kessler and Eugene Kessler face another lawsuit from 21 EB-5 investors who allege they were misled into investing in the project.
In July, the hotel project secured a stalking horse bidder for $38.6 million by an affiliate of Magna Hospitality Group, which was then increased to o $39.1 million. If the court approves the sale, the buyer would be able to close on the property free and clear of any liens and claims on the property.