A commercial mortgage-backed securities loan is set to refinance both the Four Seasons Resort at the Surf Club in Surfside and the Four Seasons Resort Palm Beach, as reported by the credit rating agency DBRS Morningstar. Citi Real Estate Funding and German American Capital Corp. are the loan originators, offering a fixed-rate, four-year interest-only loan at 8.7 percent.
These two luxurious hotels, located at 2300 South Ocean Boulevard in Palm Beach and 9011 Collins Avenue in Surfside, collectively boast 309 rooms. All Four Seasons properties in South Florida, including those in Fort Lauderdale and on Brickell Avenue in Miami, are under the ownership of Fort Partners.
According to Morningstar’s report, the hotels are appraised at $450.3 million, although the lender’s appraisal firm assigns a significantly higher valuation of nearly $800 million. Based on this valuation, the loan-to-value ratio stands at just over 50 percent.
The exact status of the loan closure remains uncertain, as Morningstar’s report was released recently, and no new financial records have been recorded. Fort Partners has not yet responded to requests for comment.
This refinancing endeavor will retire a $310 million loan extended in 2021 and also includes approximately $56.5 million in cash allocated to the developer, according to Morningstar.
Fort Partners undertook the development of the Four Seasons Hotel and Residences at the Surf Club on a 2.3-acre oceanfront site in Surfside in 2017. This oceanfront resort encompasses two luxury condo buildings. Additionally, the hotel benefits from rental income generated by 25 residential units through the developer’s revenue-sharing agreement. Despite a year-over-year decline in occupancy in 2022, the average daily rates for the condos surged by 63 percent, exceeding $6,000.
Fort Partners acquired the nearly 8-acre Palm Beach resort in 2014, the purchase price of which remains undisclosed. In 2019, the developer completed a $74 million renovation. More recently, over $6 million was invested in upgrading the ballrooms and meeting spaces.
These two hotels rank among the most exclusive and expensive in South Florida. In Palm Beach, the 207-key Four Seasons outperformed its competitors in average daily rate and revenue per available room. Specifically, it reported an average daily rate of over $1,300 per night in 2022, with a revenue per available room of $750 and an 85 percent occupancy rate, according to Morningstar’s data.
In Miami-Dade County, the 102-key Four Seasons demonstrated significantly higher figures in average daily rate and revenue per available room compared to other hotels, nearing $2,800 per night and $1,700, respectively. Occupancy was estimated at about 95 percent in 2022. Competing establishments include the St. Regis Bal Harbour Resort, Acqualina Resort & Residences in Sunny Isles Beach, and the Setai South Beach.
However, these hotels are not immune to the surge in insurance premiums, with costs having risen by over 225 percent since 2019, as per the Morningstar report.
Last year, Fort Partners successfully paid off its $210 million construction loan for the Four Seasons Residences Fort Lauderdale, marking it as the largest such loan recorded in the city’s history at the time. This financing was provided by New York-based Madison Realty Capital in late 2019.
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