A resort in Hillsboro Beach, Florida, previously managed by the now-bankrupt short-term rental company Sonder, is facing a $26 million foreclosure lawsuit. The legal action was filed this month by an entity affiliated with Emerald Creek Capital against the ownership entities of the Hillsboro Beach Resort. These entities are controlled by Daniel Lebensohn and Gregory Freedman of BH3 Management, based in Fort Lauderdale.
The 81-room resort is located at 1159 Hillsboro Mile on just under two acres of land. In 2022, Emerald Creek provided a $26 million loan to the owners. According to the lawsuit, the owners defaulted on their obligations in March 2024 after failing to pay real estate taxes. Emerald Creek covered these taxes with payments totaling nearly $2.92 million.
The complaint also states that when the loan matured in August 2024, it was not repaid. A forbearance agreement expired on January 1 without repayment as well. The outstanding debt equates to approximately $321,000 per room.
A spokesperson for the resort’s owners described the hotel as “an oceanfront gem.” The spokesperson said that increased interest rates and Sonder’s bankruptcy last November have made refinancing difficult but added that efforts continue to resolve matters with their lender: “The owners are still trying to work it out with their lender.”
Lebensohn and Freedman developed the Hillsboro Beach Resort in 2021. Their firm BH3 Management is not named as a defendant in the lawsuit. BH3 Management has been involved in other South Florida projects such as an 844-unit multifamily development in Fort Lauderdale’s Flagler Village and a condo conversion project in Hallandale Beach.
Sonder’s bankruptcy reportedly caused disruptions at its hotels in Manhattan and affected short-term rental operators elsewhere, including Los Angeles. The company filed for bankruptcy after unsuccessful attempts to stabilize operations through partnerships like one with Marriott.
New Orleans experienced the most significant impact from Sonder’s collapse, affecting 32 properties according to TRD Data. Other markets impacted included Miami, Orlando, Palm Springs, and Boca Raton.
