Foreclosure Roundup: Miami Jai-Alai after less than 9 months

Gambling on casino ends in foreclosure lawsuit for Miami Jai-Alai

Foreclosure Roundup

South Florida Business Journal by Brian Bandell, Senior Reporter

Date: Friday, September 21, 2012

 

Brian Bandell

Senior Reporter- South Florida Business Journal

Less than nine months after opening its casino, Miami Jai-Alai has been hit with a foreclosure lawsuit by the lenders that financed its construction.

ABC Funding, the manager of the loan for several funds, filed a foreclosure lawsuit on Sept. 5 against Florida Gaming Centers and Florida Gaming Corp., the owners of the Jai-Alai facility at 3500 N.W. 37^th Ave. in Miami. The building is 193,899 square feet on 7 acres, including 1,500 surface parking spaces.

It also filed a foreclosure lawsuit in St. Lucie County against the same companies over the Fort Pierce Jai-Alai property at 1750 South Kings Highway because it was secured by the same mortgage.
A representative of Florida Gaming declined comment.

Shares of Florida Gaming traded at a 52-week low of 50 cents on Friday after opening at $1. They closed trading at 80 cents. The 52-week high was $5.37 on Sept. 28, 2011.

Florida Gaming obtained the $87 million mortgage to build its 40,000-square-foot casino in April 2011 through ABC Funding, which included participation from Boston-based Summit Partners, JPMorgan Chase Bank (NYSE: JPM), Locust Street Funding and several funds organized by Canyon Capital Advisors.

The loan turned some heads, as Florida Gaming had a market capitalization of only $19.4 million and just $16.6 million in assets at the time it secured the financing, which carried an interest rate ranging from 15.75 percent to 16.50 percent. Freedom Holding, the majority owner of Florida Gaming, pledged all its stock in the company as additional collateral.

It appears that roll of the dice didn’t work out.

The casino at Miami Jai-Alai opened in January with 1,035 Class III slot machines, an expanded poker room, electronic blackjack, roulette, dominoes, new restaurants and a live-event venue. Florida Gaming posted revenue of $33.1 million in the first six months of 2012, but it lost $6.8 million due to higher expenses. It also had more than a dozen construction liens filed against it by the contractors who helped build the casino.

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As of June 30, Florida Gaming had $84 million in assets against $100.6 million in liabilities.
Its Securities and Exchange Commission filing for its second quarter results admitted that Florida Gaming missed a principal payment on its loan in July and had $84.1 million outstanding.
Fort Lauderdale attorney Marissa Kelly, who represents ABC Funding in the lawsuit, couldn’t be reached for comment.


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