Originally published Aug. 13, 2020
In late 2018, the Fontainebleau Miami Beach completed a $1 billion mortgage refinancing. A year later, the iconic oceanfront resort, which has hosted everyone from Frank Sinatra to James Bond, refinanced again — this time for nearly $1.2 billion.
The back-to-back refinancings allowed the Fontainebleau’s owner — Miami developer Jeffrey Soffer — to cash out nearly $200 million in equity from the property, according to investment ratings reports.
But they also left the company locked into a rigid repayment schedule — one that has become an albatross amid a COVID-19 pandemic that has triggered a deep downturn in global travel.
But taxpayers may come to the rescue. The Fontainebleau could qualify for up $97.5 million in public funding under a plan that owners of hotels, shopping malls and other commercial properties are lobbying for in Congress.
Hard-hit hotel companies are pushing especially hard for the legislation, which boosters have dubbed the “HOPE Act.”
It “would be a huge help for us — and not just for us, but for other property owners that are in the same position that we are in,” said Deric Eubanks, the chief financial officer of Ashford Hospitality Trust Inc., during the company’s second-quarter earnings call last month.
Ashford, which owns 117 hotels around the country, including nearly a dozen in Florida, is carrying more than $4 billion of hotel-backed mortgages.
“I know property owners would be very appreciative of elected officials doing something to assist us, especially in the hospitality industry,” Eubanks added.
But advocates for workers are pushing back. Rather than spending billions to help hotels and other property owners pay off their lenders, they say Congress should focus on combating the public-health pandemic and helping front-line employees — many of whom remain out of work — through aid such as continuing the $600-a-week boost to unemployment benefits and covering COBRA health insurance premiums for laid-off workers.
“They’re trying to make this bill about mom-and-pop, small hotel owners. And there are some. But for the most part, these loans are held by large real-estate investors — several with billionaire owners, like the Fontainebleau,” said Wendi Walsh, the secretary-treasurer of UNITE HERE Local 355, which represents roughly 1,000 workers at the Fontainebleau. “These are companies in some cases that have been really financially irresponsible that then are going to get a bailout.”
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