Miami Investment Firm Faces Foreclosure Setback with Another Hotel Loss

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In a dramatic week for CGI Merchant Group, the Miami-based investment firm has faced significant setbacks in its real estate holdings, highlighted by the foreclosure auction of the Gabriel Miami Downtown. This loss comes on the heels of CGI’s previous foreclosure of the Waldorf Astoria in Washington, D.C., intensifying the firm’s challenges in a turbulent financial environment.

Foreclosure Hits for CGI Merchant Group

The Gabriel Miami Downtown, a prominent hotel located at 1100 Biscayne Boulevard, was recently auctioned off in a Uniform Commercial Code (UCC) foreclosure sale. The property was acquired by an affiliate of Madison Realty Capital. This development marks CGI Merchant Group's second major loss within a week, reflecting broader struggles amidst high interest rates and escalating insurance premiums.

CGI Merchant Group had been battling foreclosure across three of its significant hotel properties this year, and the Gabriel's foreclosure adds to the firm's mounting troubles. Despite these setbacks, CGI remains determined to reclaim its assets. A spokesperson from the firm shared that efforts were underway to negotiate with Madison Realty Capital to prevent the auction, though these attempts fell short. "We are still in close communication with Madison and working towards a resolution," the spokesperson explained.

The Gabriel Miami Downtown: A Brief History

The 129-room Gabriel Miami Downtown, originally purchased by CGI in 2013 for $19.5 million, was rebranded from Casa Moderna to ME by Meliá and finally to Gabriel. Records show that CGI had leveraged significant debt against the property, including a $24.5 million loan in 2014, which grew over time. Madison Realty Capital had refinanced this loan, increasing it to $60.4 million.

CGI's attempts to recapitalize and negotiate with potential debt partners fell through, culminating in the auction of the Gabriel. The hotel’s location within the luxurious Marquis condo tower adds to its value, making the loss particularly significant.

Broader Implications and Future Outlook

The foreclosure of the Gabriel Miami Downtown follows CGI’s recent loss of the Waldorf Astoria in Washington, D.C., previously known as the Trump International Hotel. CGI defaulted on a $285 million loan on this property, leading to its takeover by BDT & MSD Partners at an auction in early August.

Additionally, CGI faces potential foreclosure on its Gabriel South Beach hotel on Ocean Drive, connected to a $71.1 million loan from Deutsche Bank. The auction for this property is tentatively scheduled for September 12, though repeated postponements suggest ongoing negotiations.

Conclusion

The turmoil at CGI Merchant Group underscores the volatile nature of the real estate market and the pressures faced by investment firms in today’s economic climate. As the firm continues to navigate these challenges, the outcome of ongoing negotiations and future auctions will be closely watched by industry observers.