An affiliate of developer Penn-Florida Cos. has staved off foreclosure at its Via Mizner apartment building at the eleventh hour by filing for bankruptcy.

Via Mizner Owner I LLC, owned by Mark Gensheimer’s Penn-Florida, filed for Chapter 11 bankruptcy protection on Wednesday, hours before a Uniform Commercial Code foreclosure auction of the Boca Raton apartment building was set to take place.

Blackstone Mortgage Trust, which owns a $145M mortgage tied to the 366-unit, 14-story building at 101 E. Camino Real, initiated the UCC foreclosure last month, seeking a public sale of the building's ownership entity after it defaulted on the mortgage, The Real Deal reported.

“We’re surprised and disappointed the borrower chose to pursue this path,” a Blackstone Mortgage Trust spokesperson wrote in a statement to Bisnow. “We believe this is a high-quality, well-located asset in a sector with strong fundamentals and capital markets liquidity.”

The landlord has between $100M and $500M of both assets and liabilities, according to the Chapter 11 petition. Its largest unsecured creditor is ZRS Management, a Florida-based apartment and multifamily property management company, which is owed about $780K in outstanding payables.

The bankruptcy was filed to avoid foreclosure and restructure the company's debt, said Bradley Shraiberg, the attorney representing Penn-Florida in the bankruptcy case.

“Because of the imminent UCC sale, the management of the company is looking out for all of the creditors as a whole, as well as the company's investors, as opposed to just the senior secured creditor,” Shraiberg, founding partner of law firm Shraiberg Page P.A., told Bisnow in a phone call.

The apartment building, which was completed in 2016, has one-, two- and three-bedroom apartments as well as a tower suite and penthouse apartments, with monthly rents that range from $2,946 to $7,249, according to its website.

Penn-Florida took out a $195M mortgage from Blackstone Mortgage Trust in 2021 to refinance a $180.5M loan originated by Mack Real Estate Group in 2017, TRD reported. A Blackstone Securities and Exchange Commission filing from October shows the loan's total unpaid balance is now $145M.

“We expect borrowers to honor the commitments they make under their agreements and we are focused on reaching the best resolution for our investors,” Blackstone's spokesperson said.

The building is part of a $1B mixed-use project that has encountered its own set of challenges. Penn-Florida is developing a Mandarin Oriental Hotel & Residences as part of the project that was once expected to deliver in 2020. It is still unfinished, and in August, a handful of prospective buyers sued the developer to try to get their deposits back.

“The loan for 101 Via Mizner, a luxury apartment building, recently matured. The loan was in good standing at maturity with a refinance pending,” a Penn-Florida spokesperson said in a statement after this article's initial publication. “To allow time for the refinancing to close, a reorganization proceeding is being utilized which will also provide for the building to continue operating in its normal course.”

The spokesperson said the bankruptcy is unrelated to the Mandarin Oriental development.

UPDATE, JAN. 16, 2 P.M. ET: This story has been updated to include a statement from Penn-Florida Cos.