A bitter legal battle is about to brew for the Sagamore Hotel in the wake of owner Martin Taplin’s death, as two investment firms each have signed and executed contracts to buy the property, The Real Deal has learned.
Merchants Hospitality, a New York-based firm that owns the Hyatt Andaz, Philippe Chow and Westin Aruba Hotel & Casino, has the first executed contract, signed in December for $70 million for the South Beach hotel, a spokesperson for Merchants confirmed to TRD.
Taplin later signed a $63 million contract with Fort Lauderdale-based InSite Group, Tuesday of last week, just before he drove to his step-mother’s penthouse on the 25th floor of Harbour House in Bal Harbour and fell to his death, several sources told TRD. Ron Tencer, InSite’s executive in charge of acquisitions, declined to comment on the contract, referring TRD to the company’s outside counsel, who did not return calls seeking comment.
Now, lawsuits are expected to be filed. Multiple attorneys have told TRD that the battle will likely be played out in probate court and could take months to resolve. “It will most likely be his estate that sorts all of this out,” said Jacqueline Augusto, principal of Augusto Law Group in Coral Gables, who is not involved in the case.
On Wednesday, a first step in the legal process was taken when Taplin’s daughter Jennifer Sazant filed an emergency motion in probate court related to Taplin’s estate.
In the meantime, a serious deadline looms. The Sagamore faces the threat of foreclosure from LNR Partners if a $31.5 million balloon payment and $14 million in interest is not paid by April 11. LNR has not responded to messages left at the company’s Miami Beach headquarters.
The events leading to Taplin’s death last Tuesday, revealed to TRD by sources who worked with Taplin for several years but declined to be named, combined with information from Bal Harbour’s police chief, unveil a sad saga leading up to his death at age 77.
Taplin fell from the 25th-floor balcony at Bal Harbour Tower, 9999 Collins Avenue, Bal Harbour Police Chief Mark Overton confirmed to TRD. Overton said the matter still remains under investigation. “It is either an accidental fall or suicide — those are the only two determinations that are possible,” Overton told TRD. Taplin was alone on the balcony at the time of the incident.
Months earlier, in November, Taplin had willing buyers for the oceanfront Sagamore Hotel at a price of $80 million. But he was urged by his son-in-law Neil Sazant to wait to see if the debt could be refinanced with another lender, sources said. But that didn’t pan out.
By December, another willing buyer — Merchants — emerged for the Sagamore at $70 million. Merchants executives and attorneys from New York and Taplin negotiated to sell the hotel. Taplin signed a contract, unbeknownst to his son-in-law or his attorney, sources said. Merchants also sent a non-refundable $5 million deposit accepted by Taplin, according to sources. Merchants executives declined to comment, citing a confidentiality agreement.
Sazant refuted the contract’s existence to TRD on Tuesday, but said he had no comment.
He and his attorney were working with the Fort Lauderdale-based buyer, InSite Group, to purchase the hotel for $63 million. Under mounting pressure, Taplin signed the deal on March 8, sources said. InSite, backed by Israeli investors, owns hotels and multi-family projects, according to the company’s website. The company owns such hotels as the Sheraton Tampa Riverwalk, the Coco Key Resort in Orlando, and the former Clarion Suites in New Orleans, all purchased last year in a bulk deal.
One key difference in the deals, sources say: Merchants has its own management company, so it would not need the Sagamore’s leadership, including Sazant. InSite, however, agreed to retain him and and others, sources said.
The Sagamore, owned by Sagamore Partners Ltd., had faced hard financial times before and filed for Chapter 11 bankruptcy protection in October 2011. At the time, Sagamore Partners Ltd. said it filed for bankruptcy to protect the property from a foreclosure suit filed by special servicer LNR Partners. The hotel had defaulted on its $31.5 million mortgage and tried to stop a foreclosure action in 2010. Sagamore Partners said that it stopped making the payments in an effort to restructure the loan, as per LNR’s instructions.