South Beach Hotel Developer Faces $67 Million Lawsuit
Monday, September 14th, 2009
Edgardo Defortuna, president of Fortune International, has been named in a $67 million foreclosure lawsuit against the former Seville Hotel South Beach which had previously become part of the company’s redevelopment projects. The company owns several condo/hotel properties throughout Miami, and was having difficulty selling units at the Seville Hotel South Beach for several months.
Fortune International is the third-largest residential developer in the South Florida area, reporting $563 million in sales for 2007. The foreclosure complaint was filed by FirstBank Puerto Rico. Fortune International had planned to redevelop the hotel into a residential unit, and had contracted with Ritz-Carlton to manage the property as part of the Ritz-Carlton Residences and Club, with 89 units to be completed trough 2010.
The lawsuit indicates that the Ritz-Carlton had pulled out of the deal, but Defortuna had kept this detail a secret from investors. The old hotel property is in need of major renovations, and will now no longer be developed by Fortune International or their partners. FirstBank Puerto Rico had given 2901 Beach Ventures, a partner of Fortune International, a sum of $65.8 million to redevelop the property in late 2006. However, without the support of the Ritz-Carlton Residences and Club program, the property may not have as much value for investors.
The Seville Hotel South Beach has remained closed during the renovation and redevelopment process, but critics say that the hotel itself needed a complete ‘facelift’ because several areas were in need of extensive repair. Peter Zalewski, CEO of Condo Vuntures, LLC claims that the total cost of major renovations would make it very difficult to sell the units at a high price, and that he cannot “imagine that anyone who purchases it would spend more than $100 per square foot on renovation.” (Source: South Florida Business Journal)
This is the first foreclosure lawsuit against Fortune International of Miami.
