Things are continuing to get ugly in the luxury condo development world as the credit crunch continues. I suspect 2010 will be the year of the record lawsuits, but 2009 is shaping up nicely. It is still anyone’s guess just how long Donald Trump will be spending in court over the next couple of years, but he is by no means alone.
One of the largest luxury residential developers in Florida, Fortune International, is staring at a $30 million loss ( the bulk of it’s equity) after the closed-down resort, Sonesta beach gets sold off to Argentinian developer Consultation S.A for $78 million – well dopwn from it’s 2005 price tag of $120 million. The lawsuits have been flying for a while on this one – Fortune International and Sonesta had planned a 50/50 re-development of the Sonesta Beach Resort site into a $300 million luxury condo hotel, but the city of Key Biscayne rejected the plans.
Then the owner of Fortune International, Edgardo Defortuna, was named in a $67 million foreclosure suit against the Seville Hotel South Beach, and things started to fall apart in a big way. The lawsuit was filed by FirstBank Puerto Rico after the $65.8 million mortgage fell into default.
Another lawsuit was also filed after investors discovered that a planned partnership with Ritz Carlton had fallen through, but was kept secret. Unfortunately, the Old Seville Hotel is in such a mess, it is unlikely to make a good redevelopment project because the cost of renovation would be too high in today’s market.
