Jeffrey Soffer’s $800M Diplomat resort purchase called off
Brookfield said in an SEC filing that the sale agreement was terminated on May 8
Jeffrey Soffer’s planned purchase of Brookfield Property Partners’ 1,000-room Diplomat Beach Resort Hollywood is called off, as hoteliers nationwide reel from the impact of the coronavirus pandemic.
Brookfield reported in its first quarter earnings filing that its sale agreement was “terminated by the third-party purchaser.” Soffer’s Aventura-based Fontainebleau Development was the proposed buyer of South Florida’s second biggest hotel at 3555 South Ocean Drive in Hollywood, at a price of about $800 million, according to sources. Soffer’s 1,600-key Fontainebleau Miami Beach is the region’s largest hotel.
Brookfield said in Securities and Exchange Commission filing that the purchase agreement was terminated on May 8. The move comes at a time when hotel occupancy is suffering due to hotel closures and stay-at-home restrictions.
Fontainebleau Development could still come back to the table later on, according to the company’s president, Brett Mufson. “We love the asset and continue to have discussions with Brookfield given the Diplomat’s clear synergies within our wider hospitality portfolio,” Mufson said.
Soffer launched Fontainebleau Development in March 2019 after splitting up interests in Turnberry Associates with his sister, Jackie Soffer.
A spokesperson for Brookfield did not immediately return a request for comment.
The Diplomat resort hit the market in January 2019 and was expected to trade for up to $1 billion, or $1 million a key.
Brookfield Property Partners, the real estate arm of Toronto-based investment manager Brookfield Asset Management, paid $460 million for the resort in 2014. Shortly after the sale, the former Westin hotel was rebranded to Curio, a Hilton Worldwide Holdings brand.
In April 2017, Brookfield completed a $100 million renovation of the beachfront property, which has 96 suites, 515 king rooms, 484 double rooms, and more than 200,000 square feet of meeting and event space. It features 10 restaurants, including Monkitail by Michael Schulson.
Brookfield refinanced the hotel with a $168 million loan from Morgan Stanley, J.P. Morgan and Wells Fargo in September.
For weeks, South Florida’s hotels have been suffering from the impact of the pandemic. Miami-Dade County and the city of Miami Beach ordered all hotels, motels and short-term rentals shut down effective March 23. Since then, hotels have laid off thousands of employees.
According to the data provider Trepp, South Florida hoteliers have $4.2 billion in commercial mortgage-backed securities, a type of debt that is harder to restructure than conventional loans.
A $975 million commercial mortgage-backed securities loan for the Fontainebleau Miami Beach entered special servicing in late March. Mufson previously told The Real Deal that the special servicer status “by no means should be interpreted as our loan being in default or that we are behind on any payment.”