The W Hotel complex on Miami Beach, home to strong room bookings but slow condo sales, faces a foreclosure suit over a $378 million mortgage.
A German-based bank is pursuing the foreclosure action over 216 unsold condo units and the common areas in a building that’s home to one of the priciest and most celebrated hotels in South Beach. The 408-unit property at 2201 Collins Ave. opened in 2009 and this weekend is renting a suite for $1,400 per night. With more than half of its condos unsold, developers say they’re in the process of refinancing their original debt.
A lawyer for the lender, Hypo Real Estate Capital, now owned by the German government after a bailout during the 2008 financial crisis, could not be reached for a comment. David Edelstein, the New York developer behind the W, dismissed the foreclosure suit as a bid by Hypo to wring more dollars out of the loan before another lender takes over.
“They’re trying to squeeze us for a few more shekels — or German marks,’’ Edelstein said. He said his company is current on debt payments for the mortgages on the oceanfront complex, which boasts two pools, a couple of high-profile restaurants, and regular celebrity sightings.
The foreclosure suit was first reported by the South Florida Business Journal.
Data provided by Condo Vultures, a real estate consultancy and brokerage, shows condo sales at the W basically stopped in January, with prices hovering around $1,800 a square foot. Peter Zalewski, founder of Condo Vultures, said the W remains one of the few towers launched during the run-up to the real estate market crash that still has units for sale. With half of its inventory still unsold four years after opening, “they are way behind where they should be,’’ Zalewski said.
He blamed the high prices, saying condo buyers can find existing luxury units in South Beach for about $700 a foot. And the W faces growing competition from new buildings, including the nearby Edition condo and hotel tower offering pre-sale units at about $2,600 a foot, Zalewski said.
Edelstein said sales are off because he and his partners are waiting for current momentum in the condo market to lift W prices. Meanwhile, the unsold W units are generating revenue by being rented out as hotel rooms.
“We have no pressure,’’ he said. “We’re making a pile of money.”