The owners of the Fontainebleau Miami Beach borrowed about $620 million to complete its recent $1 billion makeover, but according to Business Week, they haven't made payments on any of the loans since September. Now BW says they're offering a restructuring plan to lenders. Yes, yet another Miami Beach megahotel is in trouble, but the owners, Dubai World and Jeffrey Soffer, believe the Fontainebleau still has a solid future.
"Fontainebleau Miami is a victim of the collapse in room rates, not of flawed renovation," Bill Lerner, an analyst at Union Gaming Group LLC in Las Vegas, told the magazine. "It's a great hotel reopened at the wrong time."
Bank of America and other lenders haven't yet signed off on the plan, but the deal would give Soffer and Dubai World more time to pay off their debts (though with more fees) and $100 million in new equity.
Room rates in September were down 54 percent from their peak in February 2007 before the redesign was complete.
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The original Miami Beach Fontainebleau is looking to avoid the same fate as the planned Las Vegas outpost. Soffer lost control of that hotel and casino in February after the project went bankrupt.
[Business Week:Fontainebleau Miami Said to Offer Restructuring Plan (Update1)]