File 027063
Email Chain Regarding Palm House Hotel Bankruptcy Auction and Related Companies Bid (File 027063)
Email correspondence discussing Related Companies' $32 million stalking horse bid for the failed Palm Beach condo-hotel project, the Palm House Hotel, which was subject to bankruptcy auction and fraud allegations.
Summary
An October 2018 email exchange references a news article about Related Companies' affiliate, RREF II PALM HOUSE LLC, submitting a $32 million opening bid for the Palm House Hotel bankruptcy auction. The document details the property's troubled history, including an EB-5 investor fraud scheme allegedly involving misallocated funds for personal expenses. Notably, the document mentions that the development group falsely claimed that Bill Clinton, Donald Trump, Celine Dion, and Bill Koch would serve on the hotel's advisory board.
From: J [jeeyacation@gmail.com]Sent: 10/12/2018 7:27:19 PMTo: AnthonySubject: Re: Deal infofunn, but quite a messOn Fri, Oct 12, 2018 at 2:55 PM A Barrett <Hi jeffrey,Cam across this...perhaps you have some interest?I> wrote:Related Companies affiliate bids $32M forembattled Palm House HotelThe New York company, led by Stephen Ross, made a stalking horse bid for the PalmBeach condo-hotel project that is heading to auctionBy Keith Larsen October 11, 2018 06:15PMHOUSE OVERSIGHT 027063Palm House Hotel, Related Companies Stephen Ross600An affiliate of the Related Companies has emerged as the initial bidder forthe Palm House Hotel as the failed condo-hotel project heads to abankruptcy auction.The stalking horse bidder, RREF II PALM HOUSE LLC, has the sameaddress as Related Companies in New York and is led by RelatedCompanies Managing Principal Justin Metz, according to a filing in U.S.Bankruptcy Court. The company is offering $32 million for the property,which will set the floor price for a bankruptcy auction scheduled for nextmonth. Bids at the auction will start at $32.5 million.The 79-unit condo-hotel project on Palm Beach Island stalled in 2014 andits former developer now faces allegations of fraud by the Securities andExchange Commission and a group of EB-5 investors. In August, theproperty filed for bankruptcy under its court appointed receiver withcreditors claims totaling $115 million.Cushman & Wakefield's Robert Given, Errol Blumer, Michael Mulkern andRobert Kaplan are the exclusive marketing advisers for the property. Theauction is scheduled for 10 a.m. on November 16, 2018 in West PalmBeach.Given said he expects the property to sell for up to $40 million and it couldbe the last opportunity for a developer to own a hotel in the wealthy enclaveof Palm Beach. He said the next owner will likely not redevelop theHOUSE OVERSIGHT 027064property. Instead, the best option would be to continue renovating theexisting project which could take more than a year to complete, Given said.By auctioning the project through a bankruptcy sale, it will be offered freeand clear from any liens. The bankruptcy also means that the new ownerwill not have any responsibility for the issues stemming from EB-5investors who had invested in the property.The 82,648-square-foot project was first developed in 1961 and expanded in1981. The property was set to be renovated by a group led by developerRobert Matthews.Matthews then raised $44 million from EB-5 investors, according to acomplaint by the Securities and Exchange Commission. EB-5 is a federalprogram that allows foreign investors the chance to gain a green card if theyinvest at least $500,000 into certain projects that create at least 10 jobs.The SEC's complaint said, however, that much of this money wasmisallocated to pay for Matthews' personal expenses. Some of the fundsallegedly went to pay for Mathews' Connecticut home, his 151-foot megayacht, as well as to save his Palm Beach mansion from foreclosure,according to the complaint.In a separate lawsuit filed by a group of EB-5 investors, the developmentgroup claimed that famous celebrities and politicians such as Bill Clinton,Donald Trump, Celine Dion and Bill Koch — would serve on the PalmHouse's advisory board when, in fact, they did not.Related Companies, led by Miami Dolphins owner Stephen Ross,developed CityPlace West Palm Beach. The company is also proposing tobuild a 25-story office project called One Flagler in downtown West PalmBeach.please noteThe information contained in this communication isconfidential, may be attorney-client privileged, mayconstitute inside information, and is intended only forthe use of the addressee. It is the property ofJEEUnauthorized use, disclosure or copying of thiscommunication or any part thereof is strictly prohibitedand may be unlawful. If you have received thisHOUSE OVERSIGHT 027065communication in error, please notify us immediately byreturn e-mail or by e-mail to jeevacation@gmail.com, anddestroy this communication and all copies thereof,including all attachments. copyright -all rights reservedHOUSE OVERSIGHT 027066