CGI Merchant Group has lost its downtown Miami hotel in a UCC auction, marking the second time this week that the company has divested itself of one of its properties due to debt problems.
Coconut Grove-based CGI Merchant, led by founder and CEO Raoul Thomas, is battling lender foreclosures on three of its largest hotels this year. The problems are due in part to high interest rates and skyrocketing insurance premiums in Florida. Although CGI lost two of its hotels this month, the company has said it will continue to fight to regain ownership of the properties.
On Monday, an affiliate of Josh Zegen and Brian Shatz’s Madison Realty Capital acquired the 129-room Gabriel Miami Downtown in the luxury Marquis condominium tower at 1100 Biscayne Boulevard. The hotel occupies the first 14 floors of the 67-story building, which also includes 292 condominiums.
New York-based Madison had refinanced an existing $60 million loan that CGI had taken out for the hotel in 2021, bringing it up to $60.4 million, records show. As the lender, Madison likely acquired the Gabriel through a loan bid at the Uniform Commercial Code (UCC) auction.
CGI has been working on recapitalizing the loan and is in talks with potential lending partners, sources said. The only true in May. Madison had originally scheduled the auction for May but postponed it several times. This is generally an indication that lenders and borrowers are in talks and trying to find a solution to avoid foreclosure.
However, Monday’s auction was not postponed.
“Unfortunately, contrary to our expectations, Madison has decided not to grant us an extension,” CGI said in a statement.
CGI is now working to recover the property by purchasing the outstanding loan amount, the company said.
“Our sole goal is to reach an amicable financial agreement,” GGI said in its statement, adding that it is “in close communication” with Madison. “We are working closely with a key capital partner and have developed a capital solution that will help finance the Gabriel Downtown Miami.”
Madison Realty declined to comment.
CGI bought the Marquis Towers’ hotel and common areas, including the restaurant space, in 2013. The price, according to documents, was $19.5 million, although it was reported as $37.5 million. The higher amount likely reflects the additional cost of furnishings and furniture.
At that time, the hotel was called Casa Moderna. CGI Merchant changed the name to the Spanish brand ME by Meliá and later to the Gabriel brand.
In 2014, CGI took out a $24.5 million loan for the hotel and increased that amount several times in the following years, records show, transferring the debt several times to different lenders.
In Washington, DC, CGI is fighting to get its Waldorf Astoria hotel back after its lender, merchant bank BDT & MSD Partners, took over the property through foreclosure on Monday. Last year, CGI reportedly defaulted on a $285 million loan for the hotel after the company bought the leasehold rights to the property from Donald Trump’s family business for $375 million in 2022.
In South Beach, CGI also faces a UCC foreclosure on the seven-story, 132-room Gabriel South Beach at 620, 626, 640 and 650 Ocean Drives. That foreclosure is tied to a $71.1 million Deutsche Bank loan on the property. The auction date has also been pushed back several times, suggesting that borrower and lender are in talks to find a solution.
Most recently, the auction date for Gabriel South Beach was postponed to September 12th.
