According to the Wall Street Journal, the Soffers took on a sizeable debt to buy and revamp the hotel, and lenders, including Bank of America, could declare a default on a $670 million construction loan. (The paper cites “various reasons” for the default, including liens against the property by unpaid contractors.)
A 45-day agreement not to declare default expired earlier this month. The Fontainebleau declined to comment on that agreement, but said the hotel has not missed a debt payment and is in negotiations with its lenders. Execs also bragged that the Fontainebleau is faring better than its rivals. (Really? Even with the opening of the W South Beach, and the popular Gansevoort South just down the road?)
Jeffrey Soffer offered the following statement:
As with most businesses during these particularly difficult economic times, we are facing challenges. But our family has always worked its way through the inevitable downturns that occur in the real estate market."
If you want to show your support but can’t quite cough up enough for the yacht, rooms start at a reasonable $224 for a Standard Room this weekend. The Fontainebleau is also offering a Fall Fling promotion via its website: Book 3 or 4 nights (Sun–Thu) and get 1 night free—plus a $100 Resort Credit. The deal starts at $249 a night until September 30, and a “slightly higher rate” applies from October 1–December 22.