The Fontainebleau resort hotel in Miami Beach got a $123 million boost to its loan through refinancing and signed an agreement that foreshadows its plans for legalized gambling.
It also appears the ownership of half the hotel changed hands.
The hotel that opened in 1954 and was renovated a few years ago for $1 billion saw its mortgage ramped up to $535 million thanks to JPMorgan Chase Bank (NYSE: JPM).
The 1,504-room resort covers more than 20 acres and includes 12 restaurants and nightclubs, a 40,000-square-foot spa and a marina.
The loan secures not just that real estate but the hotel’s intellectual property in multiple countries as well.
On the same day as the loan extension, the partners who previously own the hotel together, Turnberry Associates developer Jeffrey Soffer and Istithmar Hotels, the investment arm of Dubai World, filed an earnout agreement in Miami-Dade County court records. It stated that the FBIW Acquisition, a company incorporated in October in Delaware, would pay Istithmar a “gamings earning” in the event that Florida legalizes gambling.
Mario A. Romine, Turnberry’s senior VP and general counsel, was the authorized signator for both Soffer’s companies and FBIW Acquisition, which indicates they are related.
Given that the term “earnout” refers to compensation on the back end of an acquisition, it appears that Soffer’s group bought out Dubai World’s 50 percent stake in the hotel and promised to given them residual payments should Florida legalize gambling.
The fact that such an agreement exists makes it clear that Soffer believes Fontainebleau would benefit from gambling, perhaps by becoming a casino.
Soffer is no stranger to gambling. He tried to build the Fontainebleau Las Vegas but that projected failed during the recession.
Consider this quote that Fontainebleau President Phil Goldfarb gave the New York Times in 2011: “If casinos are approved for the city of Miami, Miami Beach should have the opportunity to have casino gaming in a luxury resort right on the beach.
Source : Brian Bandell