Real estate development and hospitality group Fontainebleau Development has lined up a $1.2 billion refinancing of its Florida luxury resort, Fontainebleau Miami Beach.
Goldman Sachs and JPMorgan Chase will combine to originate a $975 million loan and provide $210 million in mezzanine financing, according to bond rating firm Morningstar DBRS, which is evaluating a new commercial mortgage-backed securities offering that will hold the mortgage loan. Fontainebleau Development will contribute another $94.4 million. The new financing is set to be used to refinance existing CMBS and mezzanine debt of $1.2 billion that is due this month.
The new deal will take the volume of securitized hospitality debt issued in 2024 past $24 billion. That is the largest volume since the Great Recession and a 185% increase over the $8.4 billion issued last year.
Many of the hotels financed or refinanced with CMBS debt are on the high end of the class spectrum. Luxury and so-called upper-upscale hotels have recorded strong demand and rate growth, and the prolonged rebound is giving lenders confidence in these assets, according to CoStar analysis.
The 1,440-room Fontainebleau Miami Beach is included in that category.
Completed in 1954, the property has a rich history of famous guests. At the time, it was one of the largest oceanfront convention and resort hotels in the United States.
The landmark hotel has served as the backdrop for several movies including "Scarface" and "Goldfinger," according to Morningstar. Additionally, the resort was the preferred retreat for numerous celebrities including Frank Sinatra, Elvis Presley, Dean Martin, Lucille Ball, Bob Hope and several American presidents.
Fontainebleau Miami Beach was added to the National Register of Historic Places in 2008.
The pending loan is expected to have an initial two-year term and accrue interest at the benchmark Secured Overnight Financing Rate, or SOFR, plus an additional 2.62% after Fontainebleau Development purchases an interest rate cap, according to Morningstar.
For the new financing arrangement, the resort was appraised at $1.72 billion, according to Morningstar. That is up from $1.66 billion in 2019, when the property was last financed, according to CoStar data.
Fontainebleau Development did not immediately respond to CoStar News' request for comment.
For the record
Newmark Co-Presidents of global debt and structured finance Jordan Roeschlaub and Jonathan Firestone, Vice Chairman Nick Scribani, Managing Director Tyler Dumon and Director John Caraviello secured the financing from Goldman Sachs and J.P. Morgan.
Updated Dec. 9 to include the Newmark team that arranged the financing.