MIAMI, FL--The long anticipated $133 million foreclosure auction of the luxury Royal Palm Oceanfront Resort (top left photo) on South Beach planned for 11 am Thursday has been abruptly cancelled just days before going up for sale to the highest bidder, according to a new report from CondoVultures.com.
A Miami-Dade Court judge signed an order on Monday staying the absolute foreclosure auction until further notice.
The auction date of May 27 was originally scheduled back in February when a final judgment was entered in favor of Wachovia Bank, which is acting as the master servicer for the debt, according to the report based on court records.
"For the court to provide a stay at the 11th hour indicates that a deal could be in the works," said Peter Zalewski, (lower right photo) a principal with the Bal Harbour, Fla.-based real estate consultancy Condo Vultures® LLC.
"As unique as the Royal Palm property is, the lender's representative obviously realizes that only so many groups have the ability and the courage to spend $133 million - or about $382 per square foot - in a foreclosure auction that must be funded all-cash on the day of the bidding. The lender's situation is not helped by the dismal U.S. economy and the plummeting Euro."
Located immediately south of the Loews Miami Beach Hotel, (middle right photo) the Royal Palm resort at 1545 Collins Ave. features two swimming pools, a gym, and 100 parking spaces.
The final judgment calls for the lender to be entitled to $108.4 million in principal, $19.4 million in interest, and $5.4 million in late charges plus attorneys fees. An additional $15 million default judgment in favor of the lender has also been imposed by the court, according to the order.
The property had an assessed value of $68.9 million, or $198 per square foot, in 2009, down from $79.4 million, or $228 per square foot, in 2008, according to Miami-Dade County's Property Appraiser.
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A loan for $112.8 million was used to finance the acquisition and renovations to upgrade the hotel into a luxury condo-hotel that could command top dollar.
Pricing on individual units was to start at more than $1,200 per square foot, according to marketing material still available on the Internet.
It is unclear why the Royal Palm condo-hotel conversion was not successful as the South Florida real estate market did not peak until the fourth quarter of 2005. South Florida prices ultimately did not start to decrease until 2007.
Even in today's dismal market the new W South Beach Residences (middle left photo) condo-hotel located seven blocks north of the Royal Palm project sold 11 units in the first quarter of 2010 for an average of nearly $1,650 per square foot, according to the Condo Vultures® Official Condo Buyers Guide To South Beach™.
In a series of unrelated matters to the Royal Palm, Falor, dubbed the "condo-hotel king of South Florida," was accused in September 2009 by the Securities and Exchange Commission of "improperly pocketing about $5 million from investors in failed South Beach and Chicago Ventures," according to the Miami Herald.
Mitchell, the "low-profile money man behind the Royal Palm acquisition," was indicted in May 2010 on "federal bank fraud charges" related to a failed Georgia bank, according to the Miami Herald.
Contact: Peter Zalewski, Condo Vultures®, 800-750-0517 or by email at peter@condovultures.com
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