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Miami-based investment firm CGI Merchant Group has lost another hotel property to foreclosure, The Real Deal reported on Friday.
The Gabriel Miami Downtown hotel was sold in a UCC (Uniform Commercial Code) auction to an affiliate of Madison Realty Capital, marking the second property in about a week that the firm had let go of as a result of debt.
CGI Merchant has faced foreclosure filings by lenders on three of its biggest hotels this year as the company has had to grapple with high interest rates and surging insurance premiums in the state of Florida. Even with two losses within the span of one week, CGI says it will keep fighting for the properties.
“Over the past few weeks, our team worked diligently to provide Madison a capital path to prevent Monday’s auction from taking place,” a spokesperson from CGI Merchant told Inman in an email. “Unfortunately, against our expectation, Madison decided not to grant us an extension on the auction and instead chose to proceed with the process. However, we are still in close communication with Madison, and they remain engaged with us to work out a solution.
“Our sole objective is to reach an amicable financial settlement that will allow CGI to repurchase the outstanding loan balance and regain the title,” CGI continued. “We are working closely with a key capital partner and have solidified a capital solution that will aid with the financing of the Gabriel Downtown Miami.”
Now the Madison Realty Capital affiliate has possession of the 129-room Gabriel Miami Downtown, which is located at the luxury Marquis condo tower at 1100 Biscayne Boulevard. The 67-story tower also houses 292 condos.
Madison Realty did not respond to Inman’s request for comment by press time.
According to records, Madison refinanced an existing $60 million loan that CGI had on the Gabriel Miami Downtown in 2021, bumping the loan amount up to $60.4 million.
CGI had reportedly been at work to recapitalize the loan, according to TRD’s sources, and were in talks with potential debt partners as of May. The auction had initially been scheduled by Madison for that month, but then extended the auction date multiple times, a common practice when lenders and borrowers are in talks to find an alternative solution to foreclosure auction.
CGI originally bought the hotel and its common areas in 2013 for $19.5 million, according to records.
The hotel was then branded as Casa Moderna. CGI ultimately switched it to the Spanish brand ME by Meliá, and eventually, the Gabriel.
The firm took out a $24.5 million loan on the hotel in 2014 and upped the loan amount several times over the next few years, according to records. During that time, the debt was also reassigned to different lenders multiple times.
The other hotel property that CGI most recently lost to foreclosure is the Waldorf Astoria in Washington, D.C., which was previously the Trump International Hotel. Last year, CGI allegedly defaulted on a $285 million loan on the hotel after purchasing the leasehold interest on the property in 2022 for $375 million from the Trump family firm. The lender, BDT & MSD Partners, took over the property during a foreclosure auction on Aug. 5.
The investment firm is also currently under threat of foreclosure on its Gabriel South Beach hotel located on Ocean Drive in Miami. The foreclosure is in connection with a $71.1 million loan on the hotel property from Deutsche Bank. That auction date is currently scheduled for Sept. 12, but like the other foreclosure auctions CGI has been involved in thus far, the date has been postponed multiple times, suggesting that the borrower and lender are attempting to negotiate an alternative solution.
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