Receiver ‘optimistic’ Palm Beach’s Palm House eventually will reopen
The court-appointed receiver for the Palm House said Wednesday that he’s optimistic that the long-troubled hotel-condominium project eventually will be completed.
“There is a way through this,” receiver Cary Glickstein told the Town Council. “I can’t stand here today and give you tangible evidence or tell you how, but the interest in completing the project is aligned. … I’m reasonably optimistic that if a few things fall into place, this effort will have been productive.”
In a Feb. 1 report, Glickstein said the cost of completing the project could exceed $100 million. The hotel-condominium, owned by 160 Royal Palm LLC, cannot move forward without financing, and it is not the receiver’s responsibility to secure money, he wrote in the report.
Glickstein is a lawyer and developer, and mayor of Delray Beach. Last summer, a Palm Beach Circuit Court judge agreed to his appointment as receiver as part of an agreement among several parties to resolve an internal ownership dispute. The project at 160 Royal Palm Way has been under construction, including numerous changes to the plans, under different owners since 2007.
Glickstein told the council the receivership “was about securing the property, taking control and trying to effect a glide path to a certificate of occupancy, so a financier would underwrite it.”
He added, “I have received term sheets from lenders approaching $80 million to complete this project … the address and the asset class are very attractive. There is demonstrated interest of adequate funding.”
Glickstein said the interested parties realize the property isn’t worth nearly as much in its current state as it would be once it is ready to open.
Glickstein said his work as receiver is proceeding on a separate track from a pending legal case to resolve a foreclosure action. The first mortgage on the property, for nearly $29 million, is held by KK-PB Financial, a company controlled by Wellington developer Glenn Straub, a previous owner of the Palm House. Straub’s company filed the foreclosure action and a motion seeking a ruling in their favor before trial has been continued until late April, Glickstein said.
A second mortgage for nearly $40 million is associated with Palm Beach Hotel LLLP and Boca Raton businessman Joseph Walsh. Glickstein said the second mortgage is “almost entirely EB-5 money,” a reference to the federal EB-5 Immigrant Investor Program. The program uses capital from off-shore sources for projects in the United States with a stated goal of stimulating economic growth and generating jobs on American soil. The program fast-tracks green cards for foreign investors.
The town is not a party to the foreclosure action. But it has a lien against the property to collect about $2 million in unpaid fines, stemming from a daily penalty of $2,000 after a Feb. 14, 2013, construction deadline was not met.
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