Fort Partners Secures $410 Million Refinancing Deal for Four Seasons in Surfside & Palm Beach
October 27, 2023
Fort Partners, led by Nadim Ashi, has secured a substantial $410 million refinancing package for two premium Four Seasons properties in South Florida. According to DBRS Morningstar, this commercial mortgage-backed securities loan will be utilized to refinance the Four Seasons Resort at the Surf Club in Surfside and the Four Seasons Resort Palm Beach. The loan origination is being facilitated by Citi Real Estate Funding and German American Capital Corp, featuring a fixed interest rate of 8.7 percent over a four-year interest-only term.
These two luxurious hotels, located at 2300 South Ocean Boulevard in Palm Beach and 9011 Collins Avenue in Surfside, collectively offer 309 rooms. Fort Partners owns all Four Seasons properties in South Florida, including those in Fort Lauderdale and Brickell Avenue in Miami.
Morningstar’s valuation of the hotels stands at $450.3 million, but the lender’s appraisal firm has assigned a considerably higher valuation of nearly $800 million, as reported by Morningstar. This valuation results in a loan-to-value ratio of over 50 percent. The financing for this endeavor was facilitated by Eastdil Secured.
It remains to be seen whether the loan has been finalized, given that Morningstar’s report was issued on Tuesday, and there is no record of new financings. Fort Partners has yet to respond immediately to requests for comments.
The refinancing arrangement is intended to settle a $310 million loan extended in 2021 and includes approximately $56.5 million in cash allocated to the developer, according to Morningstar.
In 2017, Fort Partners developed the Four Seasons Hotel and Residences at the Surf Club on a prime 2.3-acre oceanfront site in Surfside. This oceanfront resort comprises two upscale condo buildings. Additionally, the hotel benefits from rental income generated by 25 units under the developer’s revenue-sharing agreement. Despite a 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 for an undisclosed sum and executed a $74 million renovation in 2019. More recently, the developer invested over $6 million in enhancing the ballrooms and meeting spaces, as detailed in the report.
Both hotels rank among the most opulent and expensive in South Florida.
In Palm Beach, the 207-key Four Seasons exceeded its competitors’ average daily rate and revenue per available room but not in occupancy. The key performance metrics show Four Seasons with an ADR of over $1,300 per night in 2022, $750 in revPAR, and an 85 percent occupancy rate, according to Morningstar, which sourced its data from STR. The Breakers Palm Beach Hotel and Eau Palm Beach Resort & Spa are primary competitors.
In Miami-Dade County, the 102-key Four Seasons achieved significantly higher ADR and revPAR than other hotels, with rates nearing $2,800 per night and $1,700, respectively. According to the Morningstar report, occupancy in 2022 was estimated to be around 95 percent. Competing properties in the area encompass the St. Regis Bal Harbour Resort, Acqualina Resort & Residences in Sunny Isles Beach, and Setai South Beach.
According to the Morningstar report, both upscale hotels are not immune to the rising trend of increasing insurance premiums, with costs for the properties surging more than 225 percent since 2019.
Last year, Fort Partners successfully paid off its $210 million construction loan for the Four Seasons Residences Fort Lauderdale. This significant achievement marked the largest recorded loan of its kind in the city’s history at the time. The financing was provided by New York-based Madison Realty Capital in late 2019.
