Bankrupt condo – hotel reflects downturn
Aug Funding lent the owners of the St. Augustine condo-hotel $5 million in late 2005 and hoped to be paid off with interest by now.
But its attempt to auction off the 24-room South Beach hotel failed, despite more than 100 inquiries.
”Nobody showed up,” said Phillip Hudson III, head of the Florida bankruptcy practice at Arnstein & Lehr and the St. Augustine developers’ lawyer. On Friday, the fund bought the hotel in bankruptcy proceedings.
The dud of a fire sale offers another measure of a once-hot corner of South Florida’s real estate market. When condominium sales were soaring, dozens of hotels offered their rooms for sale to individuals, who could then rent out their units for a share of the profits. But as the condominium market went cold — sales were down 35 percent in April across South Florida — the condo-hotel sector slowed down, too.