Hollywood Beach Margaritaville Hits Financial Snag

The developer of the Margaritaville Hollywood Beach Resort is way behind in financing according to an article in the Orlando Sentinel:

The fate of the long-anticipated Margaritaville Hollywood Beach Resort is in peril because of problems obtaining financing, but the city and the developer say they’re optimistic the money will come through.

Developer Lon Tabatchnik is supposed to have financing in place by Tuesday but has yet to raise the $126 million needed for the 17-story, 349-room Jimmy Buffett-themed resort.

Tabatchnik had hoped to get the money through a program that gives foreign investors residency in the United States if they invest at least $500,000 each in job-creating projects.

But Tabatchnik, city officals say, has received commitments to date from only 26 Chinese investors, which would raise $13 million, far too little to meet Tuesday’s deadline.

To get the project going, he’s now talking to banks for loans and he’s asking the city’s Community Redevelopment Agency to kick in up to $25 million.

“We’re not alarmed by this,” Assistant City Manager Cathy Swanson-Rivenbark said. “We absolutely know he is feverishly working on this.”

Despite “the unforeseen hurdles,” Tabatchnik said he is not discouraged.

“We’re in the process of negotiating and finalizing the terms of our financing arrangements. We’re very close,” he said. “We’ll get them accomplished and we’ll get this project built.”

City officials say Tabatchnik wants to borrow at least $75 million from banks, but hotel analysts say banks are tight with credit for new hotels since the financial crisis in 2008.

“I think it’s going to be awfully tough. Banks are typically looking for at least 35 percent to 40 percent real equity,” said hotel analyst Scott Brush, of Brush & Co. in Miami.

The CRA already committed to lend Tabatchnik $10 million for furnishings at the resort when it is built. Tabatchnik is asking the agency to increase the loan by $15 million and provide it sooner so he can build.

The city is studying the proposal, Swanson-Rivenbark said.

Read the full story here.