CGI Merchant To Hand Miami Beach Hotel To Lender Seeking $69M Foreclosure
Rather than fight off another foreclosure lawsuit against a property it owns, Raoul Thomas' CGI Merchant Group plans to relinquish an art deco South Beach hotel to its lender.
The owner of a $69M mortgage tied to The Park Central Miami Beach hotel filed a foreclosure complaint in Miami-Dade Circuit Court last week against CGI Merchant, alleging Thomas' firm defaulted on the loan in March 2023 and has failed to bring it current since then.
In a statement to Bisnow on Wednesday, a CGI Merchant spokesperson said it is working with the lender, an entity linked to hotelier Shadi Shomar, on a smooth transfer of the property.
“CGI believes it has added significant value and CGI worked closely to vet and work with the new owner's team to cultivate a successful and smooth transfer of ownership,” the spokesperson said.
Thomas purchased the 140-room hotel — which spans four buildings at 620, 626, 640 and 650 Ocean Drive and is also known as Gabriel South Beach — in 2021 for $108M. Deutsche Bank provided a $71M loan for the acquisition, according to property records provided by Vizzda and cited in the complaint.
The Coconut Grove-based real estate investor defaulted on the loan when it matured in March 2023, according to the complaint. The loan initially matured in January, but CGI spent $5M in two separate payments to extend the maturity to March before failing to pay off the mortgage, according to the complaint.
In May 2024, Deutsche Bank scheduled a foreclosure auction for the building, The Real Deal reported at the time, via the Uniform Commercial Code, which allows for a speedier takeover by foreclosing on the ownership entity rather than the property itself.
The auction was eventually delayed as Thomas fought to hang on to that property and the Gabriel Downtown Miami, which was also the subject of a UCC foreclosure push.
There was little movement with the property until February, when Deutsche quietly transferred the loan — still with a $69M unpaid balance — to Park Central Lender LLC, an entity controlled by Shomar.
Shomar is CEO of Arte Hospitality, which owns Bentley Hotel South Beach, just a block away from The Park Central at 510 Ocean Drive. Now he appears set to add another hotel to his portfolio.
Shomar didn't respond to Bisnow’s request for comment. The lawyer representing him in the foreclosure, Josh Rubens of Kluger, Kaplan, Silverman, Katzen and Levine PL, declined to comment.
“With the new ownership's wealth of experience, particularly in the Miami Market and Ocean Drive, CGI believes the assumption of the new ownership leaves the property in a strong position, in a unique manner of its fullest potential,” CGI's spokesperson said.
CGI Merchant, founded by Thomas in 2006, has lost a handful of properties in recent years to lenders and is facing more legal challenges as it struggles to pay off mortgages.
The company was hit with a foreclosure lawsuit in February at its 55 Miracle Mile office building in Coral Gables. It sold the building last month to entities tracing to Miami Beach-based Elysee Investments' Haim Yehezkel.
Thomas lost the office at 550 Biltmore Way in a UCC auction to Secured Debt Investments, which is now looking to reposition the property. It also lost the 129-room Gabriel Downtown Miami hotel last year in a UCC foreclosure to Madison Realty Capital, The Real Deal reported.
Most notably, after purchasing the ground lease of the former Trump International Hotel in Washington, D.C., from The Trump Organization in 2021 for $375M, CGI turned the building into a Waldorf Astoria, then lost it to its lender in a foreclosure auction last year.
