A resort in Hillsboro Beach, Florida, previously operated by the now-bankrupt short-term rental company Sonder, is facing a $26 million foreclosure lawsuit. The legal action was filed last week by an entity of 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 property, located at 1159 Hillsboro Mile and covering nearly two acres, received a $26 million loan from Emerald Creek in 2022. According to the lawsuit, the owners defaulted on their obligations in March 2024 after failing to pay real estate taxes. The lender subsequently paid $731,000 to cover these taxes and later contributed another $2.19 million for additional tax payments.
The complaint states that the loan was not repaid when it matured in August. A forbearance agreement expired on January 1 without repayment as well. This brings the debt to approximately $321,000 per room.
A spokesperson for the owners described the hotel as “an oceanfront gem.” They cited rising interest rates and Sonder’s bankruptcy last November as significant challenges for refinancing efforts: “It’s likely the ownership hasn’t been able to refinance.” The spokesperson added that negotiations with the lender are ongoing.
Lebensohn and Freedman completed development of the 70,800-square-foot resort in 2021. Their firm BH3 Management is not named as a defendant in this lawsuit. Other projects by BH3 include an 844-unit multifamily development in Fort Lauderdale’s Flagler Village and a planned condo conversion with PPG Development.
Sonder’s collapse led to operational disruptions at its properties nationwide, including hotels in Manhattan and issues for Los Angeles short-term rental operators. The company filed for bankruptcy following unsuccessful recovery attempts such as a brief partnership with Marriott.
According to TRD Data, New Orleans saw the largest impact from Sonder’s closure with 32 affected properties; other cities like Miami, Orlando, Palm Springs, and Boca Raton were also among those affected.
