(Credit: iStock)

Its official: Barneys will been sold to Authentic Brands Group and B. Riley for about $270 million.

The deal, approved by Judge Cecilia Morris in bankruptcy court Thursday morning, means that ABG, a brand merchandiser, will own the luxury department store’s intellectual property. It also will allow the new owner to partner with rival department store Saks Fifth Avenue to use Barneys’ name in its stores.

It also means that, most likely, the new owners will shutter Barneys’ locations — including its 275,000-square-foot flagship property at Ashkenazy Acquisition’s 660 Madison Avenue. A property in Boston may stay open, Barneys’ attorney said.

“It’s a sad day,” Morris said after she made her decision.

A representative for Barneys would not immediately provide a comment after the hearing.

Rick Chesley, ABG’s attorney, said after the hearing that closing the stores was just one option on the table the new owners would evaluate.

Still, the move marks yet another blow to the retail industry, which has suffered from a string of retailer bankruptcies, store closures and liquidations.

The challenges have rattled both discount and high-end retailers, and the U.S. is on pace to close a record 12,000 stores this year, according to research from Coresight. Barneys had already said it would close 15 of its 22 locations, but the shuttering of more large department stores leaves additional vacancies landlords must work to fill.

Barneys, which filed for Chapter 11 bankruptcy in August after a huge rent increase at its flagship, already signaled that ABG was its stalking bid offer earlier in the month. But news reports swirled over the past couple of weeks that at least two other offers may be on the table. And yesterday, Barneys’ unsecured creditors, a group that includes some of its landlords, signaled that they have the right to review any other offer that comes in, especially if it preserves stores and jobs.

But in a Poughkeepsie courtroom, where the hearing was held, those offers never surfaced, said Joshua Sussberg, Barneys’ attorney.

Sussberg said the company had wanted to work out deals with at least three other groups who would work the keeps Barneys’ doors open and employees working.

“Everybody at this company… has been working 24 hours a day … to try to achieve this goal,” he said.

One revised offer was to come from a group of investors led by Kith investor Sam Ben-Avraham, who started an online campaign to try to save Barneys. Those investors had submitted a lower bid earlier in the process that had been rejected.

David Jackson, former head of Istithmar World, once an owner of Barneys, and a third group, a private equity firm, also were working to craft deals. Those also never pulled through, Sussberg said.

The transaction is set to close Nov. 1 at 10 a.m. but Sussberg said the purchase agreement has a provision that should circumstances change — say, another offer pops up — before the closing time, the debtors have the right to review it.

“If something changes,” he said, “we will be in touch.”

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Alan Faena and his home at 4731 Pine Tree Drive (Credit: Wikipedia, The Alexander Group)

Argentinian developer Alan Faena is looking to sell his waterfront Miami Beach estate.

Faena is putting the 8,300-square-foot, nine-bedroom mansion on the market for $16.5 million, according to the Wall Street Journal.

Property records show Faena’s Villas Como LLC paid $10.3 million for the 1-acre property at 4731 Pine Tree Drive in 2014.

The Mediterranean-style property, which was built in the 1920s, features a master suite with a custom walk-in closet designed by Faena, a master bathroom with a Louis XV mirror, original 19th century Spanish chandeliers and hand-painted ceilings, the Wall Street Journal reported.

About a year ago, Page Six reported that Faena and his partner, Ximena Caminos, were splitting up. They have a son together.

In Miami Beach, Faena and his financial backer Len Blavatnik built the Faena District, a 1 million-square-foot mixed-use project on Collins Avenue between 32nd and 36th streets. It’s home to the 18-story Faena House condo building, the 169-key Faena Hotel, Faena Forum and Faena Bazaar.

Oren Alexander of Douglas Elliman has the listing for Faena’s home. Alexander is also listing Caminos’ home at 5454 Pine Tree Drive, which hit the market in April for $6.25 million and was recently reduced to just under $6 million.

At The Real Deal’s Miami Real Estate Showcase & Forum in October, Alexander said luxury residential properties are sitting on the market in part due to bad pricing. [WSJ] – Katherine Kallergis

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Jho Low and the Time Warner Center at 25 Columbus Circle (Credit: Getty Images)

Fugitive financier Jho Low will stop fighting for assets valued between $650 million to $900 million in the massive 1MDB scandal.

He has given up his claim to assets including luxury apartments, jets, yachts and artwork that prosecutors claim he bought with stolen money, according to the New York Times. The settlement will likely impact the Time Warner Center along with multiple homes in Los Angeles.

“The message in this case is simple: The United States is not a safe haven for pilfered funds,” U.S. Attorney Nick Hanna said in a statement. “Our strict anti-money laundering controls are effective, and we will seize assets used by criminals to conceal ill-gotten gains.”

Low released a statement saying that the settlement was “the result of good faith discussions” and stressed that it “does not constitute an admission of guilt, liability or any form of wrongdoing by me or the asset owners.”

Low has never appeared in criminal court in the United States or Malaysia, and he is believed to be living in China. The agreement did not include anything about giving Low special treatment in the pending criminal cases against him.

Federal authorities have accused Low and his associates of using money from a Malaysian sovereign wealth fund to buy more than $1.7 billion worth of real estate, yachts, jets and jewelry. The fund was meant to support development in Malaysia but instead became notorious for corruption.

The Justice Department earlier this year recouped about $140 million after selling a stake Low had owned in the Park Lane Hotel.

Prosecutors are also investigating a series of bond deals that Goldman Sachs put together for 1MDB for about $6.5 billion. [NYT]  – Eddie Small

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Compass CEO Robert Reffkin (Credit: iStock)

In 2012, Robert Reffkin paid just $335.50 for his stake in a nascent firm known as Urban Compass.

Today those shares — made public in a recent court filing — are worth $517.5 million based on Compass’ latest funding round in July. And while Reffkin’s stake was likely diluted over the years, the CEO’s original stock amounts to roughly 8.5 percent of what is now a $6.4 billion firm.

Avi Dorfman

Such agreements are typically held close to the vest, but Reffkin’s was submitted this month as evidence in a case brought by Avi Dorfman, who is suing to be recognized as a Compass co-founder. Dorfman argues that he worked with Reffkin in the startup’s early days but was elbowed out. A compensation expert hired by Dorfman backed him up with a report claiming he is entitled to Compass equity near or equal to what Reffkin and Chairman Ori Allon received.

The rare disclosure sheds light on how startups divvy up equity among founders — a practice that’s particularly relevant for Compass, which is known for luring agents with big bonuses and stock options. (Agents are able to purchase stock options in lieu of accepting commission payouts.)

Reffkin’s agreement is relatively standard fare in the startup world. According to the filing, he purchased 3.355 million shares of common stock when Compass was founded seven years ago. The stock was subject to a vesting agreement that bound him to the company for several years. Specifically, 7.5 percent of his shares vested immediately and the rest vested monthly over a three-year period.

Compass founder Ori Allon

However, any “change in control,” including a sale or IPO, would cause any unvested shares to vest immediately. Under the agreement, Reffkin was permitted to sell his shares on the private market, but Compass could exercise a right of first refusal and buy them. And in connection with any eventual IPO, Reffkin agreed to a six-month lockup period.

Compass declined to comment.

Turning weeks into a windfall
The revelation of Reffkin’s stock agreement comes five years into Compass’ legal battle with Dorfman, the founder of now-defunct real estate startups RentJolt and iRent, who alleged in his 2014 suit that Compass built its product using his proprietary software and real estate expertise. This month, a New York judge ruled that Dorfman is entitled to a jury trial — a decision Compass has appealed.

But with a trial looming, Compass filed a motion Oct. 28 asking the court to preclude a jury from granting Dorfman an equity stake on the grounds that Dorfman “seeks to transform a few weeks of time into a windfall.” Compass also argued that a jury should not hear testimony from Dorfman’s two compensation experts.

A 2017 report by one of the experts said Dorfman is entitled to between 5.96 percent and 6.91 percent of Compass equity (based on the dilution of equity over time). The expert’s conclusion was based on a capitalization table provided by Compass during discovery, in addition to Reffkin and Allon’s stock agreements. (Allon’s is not yet public.)

The report noted that like other tech founders, Reffkin and Allon “gave themselves certain protections,” including control of the board of directors. In practice, that meant the two “could not be terminated from the company.”

According to Compass’ cap table, Reffkin and Allon each got just over 3 million shares (or 25.3 percent) of Compass equity in 2012. Ugo Di Girolamo, a co-founder and lead engineer, got 560,000 shares, representing a 4.31 percent stake.

Dorfman is entitled to between 2 million and 2.5 million shares, his expert concluded.

Dilution of shares
The dollar value of Dorfman’s desired stake has fluctuated as Compass raised $1.5 billion in funding from investors including SoftBank.

According to Pitchbook, Compass’ Series A round priced shares at $10 per share. Its $370 million Series G, which closed in July, priced shares at $154.27.

Taking into account the dilution of shares, Dorfman’s expert concluded that in 2017, when Compass was valued at $1 billion, the stake he is seeking would have been worth between $68.4 million and $79.3 million. Based on the current $6.4 billion valuation, Dorfman is seeking damages north of $200 million.

In its Oct. 28 motion, Compass said those figures are “grossly out of proportion” with the role he played.

“Even if the Court were to allow Dorfman to seek damages based on an expected equity stake in Compass (which, to be clear, it should not do as a matter of New York law),” Compass argued in the motion, “the value of that equity should be fixed at the time Dorfman’s claim accrued.”

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The Fort Lauderdale home and Kenny Stills (Credit: ONE Sotheby’s International Realty and Getty Images)

Houston Texans wide receiver Kenny Stills left the Miami Dolphins two months ago, and now he’s looking to part with his South Florida home.

Stills, who played for the Dolphins between 2015 and 2018, is listing the waterfront Fort Lauderdale house at 2401 Southwest 26th Avenue for $2.8 million, The Real Deal has learned. It’s hitting the market with Kim Knausz, who’s part of One Sotheby’s International Realty’s sports and entertainment division.

Dolphins owner Stephen Ross traded Stills in late August following a disagreement with the wide receiver over a fundraiser for President Trump.

Property records show Stills paid $2.43 million for the four-bedroom, four-and-a-half bathroom home along the New River in Fort Lauderdale in 2017. The nearly 1-acre corner lot includes over 420 feet of deep water frontage, a heated pool, spa and outdoor kitchen.

The football player signed a four-year, $32 million contract extension with the Dolphins in March 2017, before he was traded this summer.

Ross’ Hard Rock Stadium in Miami Gardens, home to the Dolphins, will also host the Super Bowl in 2020.

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Miami Beach loosens regulations for real estate developers and small businesses

It just got a little easier to develop real estate, including hotels and pools at single-family homes, as well as run a restaurant serving alcohol in Miami Beach.

The Miami Beach City Commission on Wednesday approved four laws that eliminate the need to seek variances on commonly requested issues such as room size for a redeveloped historic property, signage for businesses, and, in certain areas, requirements for alcohol-serving restaurants.

The new regulations affect real estate developers, business owners, and even homeowners, allowing them to avoid seeking variances that are almost always granted by Miami Beach’s land use boards.

One of the new codes will also make it easier for developers to build within North Beach Town Center, a 10-block area in the northern part of Miami Beach where the city wants to encourage pedestrian friendly, mixed-use development.

“This is better for business, better for staff, better for boards,” said Commissioner John Elizabeth Aleman, who proposed the legislation. “This is one of the ways the city of Miami Beach is trying to make it easier to do business within the city.”

The passed ordinances include:

• A law that deals with signage for small businesses and buildings. Among other things, the code removes the need for variances for signage for small businesses on the second floor of commercial buildings and allows front façade signage for buildings. The sign variance law passed unanimously.
• A law that loosens regulations related to contemporary rooftop additions to historic buildings. Those regulations include lessening the need to seek variances for setbacks and allowing hotel rooms within new additions to be the same size as those of historic structures. Previously, most new hotel rooms, even those attached to historic properties, had to be at least 500 square feet in size without a variance, even if the historic property’s rooms were smaller. The code passed by a vote of 6 to 1 with commissioner Michael Gongora dissenting.
• A law focused on allowable encroachments. This law includes waiving the need for variances for setbacks on small lots, shade spaces, pool decks and roof decks within North Beach Town Center. The law also allows the city’s design review board to waive parking and loading requirements within the city’s Town Center district.
• Outside of Town Center, the law also waives the need for variances for some mechanical equipment and planters in side setback areas in single-family districts, adjusts fence requirements in single-family home lots that are raised to adapt to sea level rise, and allows for new pool decks in pre 1942-single-family homes to be just five feet away from a neighbor.

Waiving variances for pools alarmed commissioner Joy Malakoff. “Often the swimming pool is put into a side yard and that infringes on the privacy of the neighbor,” she explained. “Swimming pools should be removed from this.” When it wasn’t, Malakoff was the lone dissenting vote.

Finally, a law waives the need for variances for restaurants that serve alcohol to open within 300 feet of a religious institution and a school for three “cultural areas:” Espanola Way and Washington Avenue near Feinberg Fisher Elementary, 41st Street in Mid-Beach, and Town Center in North Beach. The code also shrinks the minimum seat count for restaurants serving beer and wine from 30 seats to 10 seats and for eateries serving full liquor from 60 seats to 40 seats.

Miami Beach Planning Director Tom Mooney explained that a suggested clause that would forbid alcohol service until after 5 p.m. for restaurants near schools and religious institutions was rejected. Commissioner Gongora joked that this will allow for a “liquid lunch.” When commissioner Micky Steinberg questioned removing the 5 p.m. rule, Mooney explained that only full-fledged restaurants would be exempt from the variance.

“The reason for creating this particular district is to create a better environment for restaurants,” Mooney said. “The 41st Street Committee is trying to activate this street.” The ordinance was approved unanimously.

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Vlad Doronin and a rendering of Missoni Baia (Credit: Wikipedia Commons and Missoni Baia)

Russian billionaire Vlad Doronin’s OKO Group and its partners scored a $243.3 million construction loan for its Missoni Baia condo tower in Miami’s Edgewater neighborhood.

OKO Group, Oleg Baybakov’s OB Group and Cain International secured the loan for the 57-story, 249-unit luxury development at 777 Northeast 26th Terrace from Security Benefit Life Insurance Corporation. The project launched sales in the spring of 2016 and broke ground the following year.

Missoni Baia is being designed by New York-based Asymptote Architecture, led by Hani Rashid and Lise Ann Couture, a firm known for such projects as the Yas Hotel Abu Dhabi that straddles a Formula One racetrack. It also designed the Hermitage Modern Contemporary Museum in Moscow.

Missoni Baia will be the Italian fashion brand’s first residential project and is part of a broader trend of developers tying luxury brands to developments, such as the Porsche Design Tower and the Residences by Armani Casa in Sunny Isles Beach.

This is the second big loan OKO Group secured in recent months. In July, OKO Group with joint venture partner Cain International received a $300 million loan from MSD Partners, the private investment firm of Dell Technologies billionaire Michael Dell, for a 57-story, 724-foot-tall office tower planned for 888 Southeast Brickell Plaza in Brickell.

Doronin’s OKO Group has completed over 70 residential and commercial projects, including Moscow’s 85-story OKO Tower.

Missoni Baia is being built at a time when Miami’s luxury condo market is struggling due to a large supply of condos, weakened economies in South America and a strong dollar. There is a reported five-year oversupply of luxury condo buildings in the Greater Downtown Miami area, according to the Miami real estate consultancy Condo Vultures. The supply has driven down resale prices, which has led to fewer condo groundbreakings in Miami over the past two years.

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Every day, The Real Deal rounds up South Florida’s biggest real estate news, from breaking news and scoops to announcements and deals. We update this page throughout the day. Please send any tips or deals to tips@therealdeal.com

This page was last updated at 10 a.m.

Donald Trump (Credit: Getty Images)

Trump to become a full-time Florida resident. Trump filed a declaration of domicile form last month in Palm Beach County, relocating his residence from Trump Tower in Midtown Manhattan to his 128-room Mar-a-Lago mansion, according to the Miami Herald. [Miami Herald]

Miami Beach loosens regulations for real estate developers and small businesses

Miami Beach relaxes rules on development, pools, restaurants. The Miami Beach City Commission on Wednesday approved four laws that eliminate the need to seek variances on commonly requested issues such as room size for a redeveloped historic property, signage for businesses, and, in certain areas, requirements for alcohol-serving restaurants. [TRD]

Compass and Opendoor’s CEOs are sitting out a Saudi tech conference this month. A spokesperson for Compass said Robert Reffkin wasn’t invited. Meanwhile, OpenDoor CEO Eric Wu turned down his invitation. Last year, SoftBank CEO Masayoshi Son and JPMorgan Chase CEO Jamie Simon were among dozens of leaders who pulled out of the “Davos in the desert” conference, after the death of journalist Jamal Khashoggi. [Inman]

Houston Texans wide receiver Kenny Stills wants to sell his South Florida home. Stills, who played for the Dolphins until he was traded in August, is listing the waterfront Fort Lauderdale house at 2401 Southwest 26th Avenue for $2.8 million, The Real Deal has learned. It’s hitting the market with Kim Knausz of One Sotheby’s International Realty. [TRD]

Don’t count JC Penney out. The cash-strapped retailer is testing a plan to expand amenities and offer yoga classes in a Texas store before rolling the strategy out to their 850 stores nationwide. [WSJ]

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Howard Lorber and a rendering of the Bristol

UPDATED, Nov. 1, 11:50 a.m.: Howard Lorber is now an owner at the Bristol in West Palm Beach.

Property records show Vector Group CEO and Douglas Elliman chairman paid $6.87 million for unit 1601 at the luxury condo tower, which overlooks the nearby Palm Beach island, where the luxury market has seen record sales this past summer.

Flagler Investors, led by Al Adelson and Gene Golub, developed the Bristol, a 25-story, 69-unit luxury tower at 1100 South Flagler Drive. Units range from 3,600 square feet to 14,000 square feet. Douglas Elliman is handling sales of the luxury condo tower. Elliman declined to comment.

The project is the first new luxury condo building in West Palm Beach over the past decade.

Buyers include beauty mogul Sydell Miller, who closed on a full-floor penthouse for $42.6 million in March. Hedge funder Steven Schonfeld is reportedly under contract to buy Miller’s Palm Beach oceanfront estate for close to $200 million.

Edgewater developer James Harpel also purchased a unit at the Bristol, paying $7.9 million in September for unit 1204.

Lorber’s South Florida homes include a condo on Fisher Island in Miami Beach, located in the priciest zip code in the U.S.

Lorber could not immediately be reached for comment.

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Andrea Masses and Nirka Burns

Nirka Burns joined Fortune Development Sales’ 57 Ocean sales team. Burns previously worked on the One Thousand Museum sales team, managed by One Sotheby’s International Realty. Fortune Development Sales is handling 57 Ocean in Miami Beach.

Brown Harris Stevens Miami hired Andrea Masses and Erika Rodriguez as associates based in the brokerage’s South Miami office. Katharine Schroeder and Ivan Marquez joined the firm’s Coconut Grove office.

Sotheby’s International Realty opened an office in Singer Island and brought on Dermot O’Brien, who previously ran his own brokerage. Sotheby’s took over and licensed the space at 3800 North Ocean Drive, according to a spokesperson. It’s led by brokerage manager Debra Reece, who has been with Sotheby’s for over nine years.

Katherine Gale joined One Sotheby’s International Realty as a broker associate based in Delray Beach. Gale previously worked with Gale International in Songdo, South Korea, and is the daughter of Stan Gale, a real estate developer.

Mariano Perez joined Avison Young as a vice president in the firm’s Coral Gables office. He will work on expanding the brokerage’s debt and equity services and its joint venture and structured finance platforms. He was most recently assistant vice president of Grandbridge Real Estate Capital.

Howard Law Group hired two associates, Jennifer Tolston and Shakiva Brown. The real estate law firm focuses on mortgage foreclosure litigation, bankruptcy, eviction, real estate transactions and general litigation. It also relocated to a larger office in Boca Raton.

Habitat Group, led by founder and CEO Santiago Vanegas, expanded with four new employees: owner representative Gian-Marcel Adreani, development team project managers Juan Garcia and Jose R. Montes, and sales director Ana Maria Vélez.

Ted McCutcheon is now chief compliance officer of Miami-based Kawa, an investment manager with $1.2 billion in assets under management. McCutcheon was previously chief compliance officer and counsel at WE Family Offices, an independent fiduciary investment adviser based in Miami. Before that, he spent a decade as an investigator and trial attorney in the enforcement division of the Securities & Exchange Commission’s Miami office.

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Former WeWork CEO Adam Neumann and Rhône’s Steve Langman with the Lord and Taylor Building at 424-434 Fifth Avenue (Credit: Getty Images)

As WeWork attempts to scrub its image clean of Adam Neumann, some of the ousted CEO’s transactions serve as a bitter reminder of the company’s former culture of excess.

One is WeWork’s $850 million purchase of the Lord & Taylor building. Six current and former WeWork employees familiar with the acquisition told The Real Deal that WeWork overpaid, perhaps by as much as $200 million. Moreover, some said, the deal was rife with potential conflicts of interest.

A particular concern was the role of Steve Langman, a WeWork board member who held interests in the buyer, the seller and the tenant in the Midtown building before the sale closed.

“I’ve never seen a more conflicted situation,” said one person close to the deal. A source close to Langman countered that the board member had recused himself from votes that would have entailed a conflict of interest.

The future of the iconic property, at 424 Fifth Avenue, is now being considered as WeWork looks to cut costs.

The company abandoned its planned public offering in the fall and its valuation has plummeted by $39 billion. SoftBank, its largest investor, has since agreed to extend a roughly $9 billion lifeline to save the company from potential bankruptcy and has installed a new chairman, former Sprint CEO Marcelo Claure.

New co-CEOs Artie Minson and Sebastian Gunningham have committed to focusing on WeWork’s core office-space business and offloading side ventures launched by Neumann, who left earlier this month.

Most of WeWork’s heavily scrutinized transactions have been unwound, including ones involving Neumann — notably his purchase of properties that he then leased back to WeWork. (Those have been sold to WeWork’s real estate investment group.) A $5.9 million payment he received for giving the company rights to the trademark “We” was returned after withering criticism. And a $60 million Gulfstream jet the company purchased has been put on the market.

Like the Lord & Taylor building’s lease, these transactions were approved by WeWork’s board members, most who remain in place.

Among them is Langman, whose $5.5 billion private equity firm, Rhône Group, is a major investor in WeWork’s real estate investment vehicle. He was an early investor in WeWork and is known to be close to Neumann, whom he met through links to the Kabbalah Center, a spiritual organization that promotes Jewish mysticism.

Langman was chosen along with Neumann’s wife, Rebekah Neumann, and board member Bruce Dunlevie to nominate a replacement for the CEO in the event that he was incapacitated or died.

“Langman became involved at an early point, before Adam had the world circling around him,” said one current WeWork employee. A former executive said, “Langman has some weird control over Adam.”

424 Fifth Avenue (Credit: Getty Images)

According to four current and former employees of WeWork, Langman’s tight relationship with Neumann clouded the Lord & Taylor building transaction. Some questioned how he was allowed to have interests in so many sides of the deal.

After Lord & Taylor abandoned plans to stay in the 10-story, 105-year-old building, WeWork was forced to take over the entire property to satisfy lenders for the purchase. It then had to negotiate a lease with its real estate investment vehicle, WeWork Property Advisors, which was buying the property.

Langman sat on both WeWork’s board and the investment advisory committee of WeWork Property Advisors. In addition, after the deal went into contract, he and another WeWork Property Advisors executive, Eric Gross, joined the board of Hudson’s Bay Company, the seller of the building.

“It was an above-market purchase price, and we had to sign an above-market lease to save Langman’s ass and save the deal,” said one former WeWork executive. A current employee familiar with the matter said Neumann drummed up support for the acquisition. “The rationale internally was, this was a crown jewel.”

A person close to Langman said he has recused himself from all WeWork board votes relating to the company’s real estate investment vehicle, including the Lord & Taylor building lease.

A spokesperson for Canada-based Hudson’s Bay said in a statement that Langman and Gross recused themselves from all board decisions regarding the Lord & Taylor building before the sale was complete “to avoid any conflicts of interest.”

In a statement, a WeWork spokesperson said “its decision to lease space in 424 Fifth Avenue was reviewed and approved in accordance with the procedures of the board.”

A spokesperson for Neumann declined to comment.

The “Adam and Steven Show”

In March 2017, WeWork went beyond its primary business — leasing office space — and began looking at buying properties. It launched WeWork Property Advisors, a joint venture with Langman’s Rhône Group.

The venture is now part of an investment vehicle called ARK, which has purchased properties across the U.S., including a 4.7-acre development site in Austin, Texas. Although it acts as a siloed entity to WeWork, they share advisers. One current employee described it as the “Adam and Steven show,” before Neumann left the company.

Its first target was the Lord & Taylor building, which since its completion in 1914 had been the flagship store for the storied company. But with ecommerce undermining traditional retailers, its parent company, HBC, found itself desperate for cash.

“It was an above-market purchase price, and we had to sign an above-market lease to save Langman’s ass and save the deal.”

A 2016 appraisal commissioned by HBC valued the landmark building at $655 million. The following year the company had advanced discussions with prospective buyers, including Brookfield, which dangled a $700 million offer, according to the Wall Street Journal. But a person close to HBC said no formal offers were made until WeWork Property Advisors put in a bid.

An agreement was reached in October 2017. The $850 million deal called for WeWork Property Advisors to acquire the building and its managing partner, Gross, to take a seat on HBC’s board. WeWork also committed to taking space in some HBC locations.

Separately, Langman’s Rhône Group would take a $500 million stake in HBC — almost a third of the company — earning him a board seat. In December, WeWork Property Advisors put down a $75 million deposit on the building.

A HBC spokesperson said the building acquisition and Rhône’s investment in HBC were “negotiated at arm’s length” with HBC management. The deal was approved unanimously by HBC’s board before Langman and Gross became members, the spokesperson said.

“They overpaid by $150 million to $200 million,” said one person close to the matter. A current WeWork executive said, “We clearly overpaid, and it was no secret.”

The initial plan involved Lord & Taylor staying in the building through 2018. After that, the retailer would occupy a 150,000-square-foot retail space, and WeWork would move its headquarters there and take office space for its clients, HBC said in a press release at the time.

But plans to fill the retail portion of the building with Lord & Taylor fell through. As a result, prospective lenders began demanding that WeWork lease the entire building to secure debt, according to three people with knowledge of the situation. The lenders were also wary of the high purchase price of the property.

In addition, more than $200 million was needed for a gut renovation of the building. In November 2018 Manhattan Community Board 5 recommended rejection of the new designs, which were led by Bjarke Ingels Group and included a two-story glass cube on the roof. The Landmarks Preservation Committee ultimately approved the project.

Pressure to close the deal increased as WeWork’s investment arm missed two deadlines and paid $50 million to keep the seller from walking.

Meanwhile, tensions grew between WeWork’s real estate division and WeWork Property Advisors over the cost of the rent. They ultimately agreed to a $105-per-square-foot lease — a figure boosted by the higher-priced retail space. Office asking rents for that neighborhood were $75 a square foot in first quarter of 2019, according to CBRE.

As WeWork’s board signed off on the lease, JPMorgan and Starwood committed to provide a $900 million loan to WeWork Property Advisors for the purchase and renovation of the building.

A landmark’s murky future

WeWork Property Advisors closed on the sale of the Lord & Taylor building in February, more than a year after agreeing to buy it. The building is now a construction site, with WeWork overseeing extensive renovations.

But the company’s options for the building appear to be dwindling. Efforts to attract other tenants have failed. In July, Amazon briefly discussed taking over the building. And with massive job cuts looming at WeWork, the prospect of its employees filling the Lord & Taylor building is unlikely.

Last week, Crain’s reported that the company hired a leasing broker and is considering marketing the building to enterprise clients. Rumors that WeWork is mulling a sale are circulating in New York’s real estate industry, but unloading it could involve a significant markdown of the building, some prominent city brokers said.

In a statement, WeWork said it “remains committed to 424 Fifth Avenue,” and that it is “excited” to reopen the building next year once it completes renovations.

Regardless of its future, the building has served as a stepping stone for Langman and his firm Rhône Group. With its Hudson’s Bay stake, Rhône joined HBC’s chairman in taking the company private this month, at a valuation of about $1.3 billion.

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Here are three real estate events coming up next week:

Host: Bisnow
Date: Nov. 4 to Nov. 5
Time: 8:30 a.m. to midnight

Bisnow is hosting its Ascent 2019 event at 1 Hotel South Beach in Miami Beach, 2341 Collins Avenue from November 4 to November 5. This invite-only retreat for emerging owners and developers will feature a line of networking sessions, discussions and keynote speeches. Samy Kamkar of Openpath will be a keynote speaker at the event.

Host: BREIA & MDREIA
Date: Nov. 6
Time: noon to 6 p.m.

BREIA & MDREIA are holding their 7th Annual Developer Showcase and Real Estate Expo at the Signature Grand in Davie, 6900 West State Road 84, from noon to 6 p.m. Come to this event for networking opportunities, breakout sessions, raffles and informative booths.

Host: CREW Miami
Date: Nov. 6
Time: 6 p.m. to 9 p.m.

CREW Miami is holding a Networking Event & Silent Auction event at the Brickell Flatiron in Miami, 1001 South Miami Avenue from 6 p.m. to 9 p.m. Join in on this evening of networking where all proceeds go to the Women’s Fund Miami-Dade and CREW Miami’s scholarship fund.

To submit more industry events, please reach out to events@therealdeal.com.

The post Mark your calendars: These are South Florida’s top real estate events next week appeared first on The Real Deal Miami.

690 Northwest 13 Street and Francisco Martínez-Celeiro (Credit: Google Maps, Wikipedia)

Spaghetti western movie star Francisco Martínez-Celeiro sold his Overtown warehouse in an Opportunity Zone for $9.5 million.

Rumasa Corp, which is tied to Martínez-Celeiro, sold the 72,903-square-foot warehouse at 690 Northwest 13th Street to a company tied to Kite Tax Lien Capital of Vero Beach.

The building sits on 2.6 acres of land next to Booker T. Washington Jr. High School. It sold for $130 per square foot.

Martínez-Celeiro, better known by his stage name George Martin, bought the property for $1.45 million in 2002, records show.

Property values in Overtown, a historical African American community, are rising due to the neighborhood’s proximity to downtown Miami, Wynwood and its designation as an Opportunity Zone. Virgin Trains USA’s MiamiCentral station is also located in the neighborhood.

In order to qualify for the Opportunity Zone’s tax benefits, a developer or investor has to build new construction or “substantially redevelop” an existing property, which means doubling the investment in the property.

Michael Tillman’s PTM Partners and Estate Investments Group are seeking to take advantage of this tax break and are building a 360-unit multifamily building at 218 Northwest Eighth Street in Overtown.

Martínez-Celeiro owns the Babylon Apartments site on Brickell Bay Drive. He recently lost a battle with commissioners to rezone the property to allow for a 24-story residential building. The site was previously home to one of Arquitectonica’s first projects in Miami and was known for its post-modern design.

The post The final act: Spaghetti western star sells Overtown warehouse for $10M appeared first on The Real Deal Miami.

Rendering of the Plaza Coral Gables

Pinstripes signed a lease at The Plaza Coral Gables, a major mixed-use project under construction in Coral Gables.

The dining and entertainment bowling venue is taking 30,000 square feet on two stories at the project. Agave Holdings, a group that includes the family behind the Jose Cuervo spirits business, is the developer.

Koniver Stern Group brokered the 15-year lease, according to a spokesperson for Pinstripes. The Coral Gables location will have an outdoor patio, 12 bowling lanes, six indoor and outdoor bocce courts, a restaurant, wine cellar and event space that fits up to 1,000 guests. Pinstripes also plans to open an outpost at the Esplanade at Aventura project next summer.

The Plaza, a more than $500 million development, is expected to open in the summer of 2022. The 2.25 million-square-foot development will have a 242-key hotel, more than 2,000 parking spaces, 174 rental apartments and 161,000 square feet of retail space.

In June, Agave Holdings closed on a $100 million construction loan from PNC Bank for the first phase of the project, which calls for 291,000 square feet of office space, 101,000 square feet of retail and the majority of the apartments.

Blanca Commercial Real Estate is handling office leasing of two Class A towers, and Koniver Stern Group is leasing the retail space. The project will surround a historic George Merrick building and include public art, an open plaza and colonnade-style sidewalks.

The post Pinstripes bowling alley inks lease at The Plaza Coral Gables appeared first on The Real Deal Miami.

Donald and Melania Trump at the entrance way of Mar-a-Lago (Credit: Getty Images)

In late September, President Trump and his wife Melania became the latest New Yorkers to relocate to Florida. The state has long been a refuge for business moguls, celebrities and athletes who are keen to protect their assets from looming threats.

On the surface, Trump’s decision to move his permanent residence from Trump Tower to Mar-a-Lago appears to be motivated by the tax benefits he would reap.

Because of a somewhat obscure state rule, the move down South could provide a critical safeguard from creditors and lawsuits. And it may also give him a boost politically in Florida, a state he likely needs to win in 2020 if he’s to hold onto the presidency.

But the move to claim residency in Florida may be more complicated than it appears, legal experts told The Real Deal.

Six months and a day

First, Trump has to establish that he resides in South Florida for at least six months a year. This includes his time traveling on his plane and going to meetings in New York City, said Anthony de Yurre, a real estate attorney with Bilzin Sumberg in Miami.

“Really, what it boils down to is you have to spend more time here than anywhere else,” said de Yurre. “How many days are you physically going to be here?

Since his inauguration, Trump has spent 99 days at Mar-a-Lago, and only 20 days at Trump Tower, NBC News reported.

….in New York, and another reason they are leaving. Taxes and energy costs are way too high, Upstate is being allowed to die as other nearby states frack & drill for Gold (oil) while reducing taxes & creating jobs by the thousands. NYC is getting dirty & unsafe again, as….

— Donald J. Trump (@realDonaldTrump) November 1, 2019

The Trumps changed their residency by filing a document known as declaration of domicile in Palm Beach County. Sebastian Jaramillo, a real estate attorney with Wolfe | Pincavage in Miami, said the document is not the way most people would declare residency in Florida. But that the declaration nonetheless bolsters Trump’s argument that he is a Florida resident.

Trumps Declaration of Domicile (CLICK TO ENLARGE)

“This is not something that gets recorded very often,” said Jaramillo. “This is probably the only thing that he could do that says ‘I am a resident of Florida.’”

Eugene Pollingue, an attorney with Saul Ewing Arnstein & Lehr, said that some residents can’t meet the six month and one day rule, which is where the “teddy bear test” comes in. In other words, where the person considers their true home.

“The real test is what is your center of gravity,” Pollingue said. “Where are your doctors, your lawyers? What church do you belong to? Where is your car registered? … In terms of Donald Trump, what is his teddy bear? Is it Mar-a-Lago? Sometimes you can’t really meet that test.”

Home sweet Homestead exemption

If Trump moves to claim homestead exemption — a legal strategy used by Roger Ailes, OJ Simpson and Burt Reynolds to protect themselves from financial threat — on Mar-a-Lago or any other property in Florida, the portion of the waterfront resort that he chooses to protect would be insulated from any legal claims, including bankruptcy.

It’s “one-hundred percent exempt from creditors,” Pollingue said. “That in and of itself is tremendous. The laws are very strong in support of this homestead exemption. The Florida Supreme Court has actually said if you take your assets and it put it in your homestead … creditors can’t attack that even if you’re doing it to defraud your creditors.”

Claiming homestead is more difficult than it appears for Trump, since Florida law says that only a half acre in a municipality. Trump’s Mar-a-Lago resort, which has served as an unofficial White House II, totals over 17 acres, according to property records. It is also a commercial property, which are not allowed to claim homestead exemption.

In this case, Trump would have to divide a portion of the property to total less than half an acre or build a house on the new property, according to Jaramillo.

Read my lips: Far fewer taxes

The most obvious draw for Trump is the taxes, or lack thereof. Florida has no state income tax, no inheritance tax, and no estate tax. It’s the antithesis of New York.

Florida’s lack of state income tax in particular has long drawn residents from other states. Trump should know. His 2017 federal tax law, which capped the amount of state and local taxes homeowners could deduct each year at $10,000, damaged the housing markets in high-tax states like New York.

But it has been a boon for Florida, which has seen a spike in out-of-state buyers closing on luxury real estate. Brokerages and developers increasingly target these buyers, particularly as the pool of foreign buyers dries up.

Some of Trump’s business associates and friends have already made the move to Florida. Jamie LeFrak, who is the son of the president’s close friend Richard LeFrak, paid $19.6 million for the mansion at 4567 Pine Tree Drive in April. Harrison LeFrak, Richard’s other son, paid over $10 million for a penthouse at the ultra-luxury Four Seasons Residences at the Surf Club in Surfside.

The billionaire investor and corporate raider Carl Icahn, whom Trump referred to as a “very dear friend,” recently announced that he’s planning to relocate his investment firm from Manhattan to Miami. And this week, Icahn’s stepdaughter purchased a $7.3 million home in Golden Beach.

Trump made his career in real estate and left his sons, Eric and Donald Jr., to run the company when he left for the White House. If he decides to get back into the real estate game after he leaves office, he could save his employees some taxes like his friend Icahn by moving his operation near his prized Mar-a-Lago and Trump Doral resorts.

The post With move to Mar-a-Lago, Trump could use Florida real estate law to protect himself from creditors appeared first on The Real Deal Miami.

Dan Suozzi

Office-space company Breather is stocking its executive ranks in a bid to ramp up expansion.

The firm, which offers meeting spaces on an hourly basis, and office space from a day to months at a time, has hired former Regus executive Dan Suozzi to lead its real estate division. He started Friday.

“My main priority is to expand the portfolio,” said Suozzi.

That mission comes at a tumultuous time for real estate startups. Many face a reckoning as they seek to raise money from investors increasingly looking for profits rather than just breakneck growth — a lesson from WeWork’s failed IPO plans and massive drop in valuation.

“Growth is a key driver, but profitability is going to be more and more of a focus in the wake of what’s happened with WeWork,” Suozzi said. He pointed to his experience at Regus, which has been profitable for years. “There’s a pathway there.”

Breather, which launched in Montreal in 2012, has raised $120 million, in rounds led by Menlo Ventures and RRE Ventures. The company has said its clients include Pandora, Spotify, Anheuser-Busch, Apple, Uber, Google and Facebook.

It has 500 spaces in 300 buildings, across 10 cities, including New York, London, San Francisco, Toronto and Los Angeles, according to the company.

Breather has undergone an executive overhaul in the past year. After raising $45 million in June last year, its co-founder Julien Smith left his position as CEO. He was replaced in January by Bryan Murphy, a former eBay executive.

Over the summer, Breather also installed a new chief technology officer, Philippe Bouffaut, who came over from Cision.

Suozzi’s new title is chief real estate officer. He had been chief revenue officer at WorkFrame, a workflow solutions platform acquired by Newmark Knight Frank last month. Before that he oversaw Regus’ real estate transactions on the East Coast from 2012 to 2017.

The post Breather hires former Regus exec to lead real estate division appeared first on The Real Deal Miami.

1000 Southeast 8th Street, Andrew Gurewitsch and Harry Weisman and Barry Katz

The party keeps going for Hialeah’s red hot industrial market.

Wheelock Street Capital, in a partnership Mitchell Property Realty, paid $26.8 million for a 234,146-square-foot fully-leased warehouse at 1000 Southeast 8th Street in Hialeah. The price breaks down to $114 per square foot.

The warehouse is close to the Miami International Airport and is fully leased by Tuuci, a high-end manufacturer of shade platforms and outdoor furniture.

Meuchadim of Florida LP, a Delaware company tied to Simon and Jana Falic, sold the property, records show. Simon Falic is the CEO of Duty Free Americas.

The 8.27-acre site can be used as a last-mile infill distribution center, according to a press release. The property, developed in 1976, last sold for $13.5 million in 2008.

Andrew Gurewitsch and Harry Weisman of Windsor Realty Partners represented the buyer, and the seller was represented by Barry Katz of Global Connections Realty.

Simon Falic and his brothers purchased Duty Free Americas, a retailer whose goods are exempt from certain taxes, in 2001. Last year, Falic and his wife purchased a home in Bal Harbour Island for $5.5 million.

Wheelock Street Capital is a private real estate firm founded in 2008 by Merrick R. Kleeman and Jonathan H. Paul. It is headquartered in Greenwich, Connecticut and Boston. Mitchell Property Realty was founded in 2019 by Edward Mitchell and owns another industrial property in Coral Springs.

Hialeah is seeing a rush of new investment due to its proximity to the airport and a recent change in zoning. Foundry Commercial recently bought an 18-acre site in Hialeah Gardens for $13.1 million where it plans to build a 320,000 square foot speculative industrial development.

Avra Jain is partnering with David Martin of Terra to refurbish an aging industrial complex at 4800 Northwest 37th Avenue. The site is just north of the Hialeah Market Station and Tri-Rail/Metrorail Transfer Station, where the city recently up-zoned 300 acres to allow for more commercial and residential development.

The post Duty Free Americas owner will have to pay taxes on this sale appeared first on The Real Deal Miami.

Every day, The Real Deal rounds up South Florida’s biggest real estate news, from breaking news and scoops to announcements and deals. We update this page throughout the day. Please send any tips or deals to tips@therealdeal.com

This page was last updated at 10 a.m.

The real estate industry is backing Miami commissioner Ken Russell’s run for re-election. Of the $1 million-plus his campaign has raised, more than $450,000 has come from donors in real estate, architecture, construction and development, the Miami Herald reported. That includes $35,000 from developers like Florida East Coast Industries, Okan Tower developer Kasim Badak and Midtown Opportunities LLC to Russell’s political committee, Turn the Page. Russell’s challengers for the District 2 spot include real estate broker Jim Fried. [Miami Herald]

Property owners in Miami’s West Coconut Grove are seeking a rezoning for multifamily development. On Wednesday, the city’s Planning, Zoning and Appeals Board will vote on a land use change for the assemblage on Carter and Plaza streets from duplex residential to medium density multifamily residential, boosting the maximum density to 58 units from 14 and allowing for ground-floor commercial space, according to the South Florida Business Journal. [SFBJ]

Breather hired a former Regus executive to lead its real estate division. Dan Suozzi joined the office-space company last week, during a tumultuous time for real estate startups. Breather, which launched in Montreal in 2012, has raised $120 million, in rounds led by Menlo Ventures and RRE Ventures. [TRD]

Compiled by Katherine Kallergis

The post Developers are backing commissioner Ken Russell’s campaign, developers target rezoning in West Grove: Daily digest appeared first on The Real Deal Miami.

Miami-Dade County Commissioner Xavier Suarez and Miami City Mayor Francis Suarez (Credit: Getty Images, iStock)

A handful of landowners in Miami want the next Tri-Rail station to be built on their properties, including sites near Midtown Miami, the Magic City Innovation District in Little Haiti, and Liberty City in northwest Miami-Dade County.

At two public meetings last week, officials discussed new stations for Tri-Rail, a publicly funded commuter train that has operated along the state-owned South Florida Rail Corridor west of I-95 and between Miami International Airport and Magnolia Park since 1989.

The meetings were attended by Miami City Mayor Francis Suarez and his father, Miami-Dade County Commissioner Xavier Suarez, who was mayor of the City of Miami in the 1980s. Also, in attendance was Miami-Dade County Commissioner Jean Monestime, whose district includes Liberty City and Gladeview. Both Xavier Suarez and Monestime are running for county mayor.

In addition to the proposals discussed last week, there is also the planned Aventura station for Virgin Trains, which county recently allocated up to $76 million to build.

Wynwood vs. Design District

The first meeting was used as an opportunity for property owners to push for Tri-Rail stations along a set of Florida East Coast train tracks east of I-95 now used by freight trains and Brightline, an express passenger train service that’s being rebranded as Virgin Trains USA. Called Tri-Rail Coastal Link, the commuter train expansion is still an unfunded concept that aspires to have more than a dozen stations from the Virgin MiamiCentral complex in Miami’s Overtown neighborhood to the Jupiter Inlet.

The Wynwood Business Improvement District wants a station platform between Northeast 26th and 27th streets. The Rammos family, which owns part of the nearby Miller Machinery & Supply Company and all of Bon Viviant Custom Woodworking, has offered to pay for a station platform by Bon Viviant. The family bought the 52,250-square-foot property for $1 million about 20 years ago.

Right now, the county and Miami-Dade County Transit still intends to invest $2.5 million to build a temporary station beneath the I-195 overpass near the Miami Design District. However, the Wynwood BID hired urban planner Cesar Garcia-Pons to create a report showing that there’s far more development occurring in Wynwood and Edgewater south of 29th Street than what can be built in the Design District.

David Polinsky

David Polinsky, a former Wynwood BID member, said a 27th street station is within walking distance for people living, visiting and working in Wynwood, Edgewater, Midtown and Overtown. It’s also in close proximity to 2,000 apartments, 1 million square feet of office, and 100 hotel rooms, he added. “Every level of government should be very proud of the fact that this is the most rapidly developing area in Miami-Dade County,” Polinsky declared at the meeting.

No one spoke on behalf of the Miami Design District during the meeting.

Little Haiti

Neil Fairman, chairman of Plaza Equity Partners and the managing developer for Magic City Innovation District, made a similar argument for a station within its 18-acre, $1 billion phased project at Northeast 62nd Street and Fourth Avenue. The development could have eight 25-story residential buildings, five 20-story office buildings, and an innovation tech center all employing roughly 7,000 people.

Fairman said the city already owns nearby parking lots and his team is willing to help build a station platform, as well as a triple-level parking garage.

Magic City isn’t the only mega-project that desires a train station. The Podolsky family has included a train on Northeast 54th Street as part of its 22-acre, 5.4 million square foot mixed-use Eastside Ridge project. No one representing Eastside Ridge, which is struggling to obtain city approval, spoke at the meeting.

Eastside Ridge, if approved, is only a mile away from the future Magic City. And the proposed demonstration station is less than a mile away from the 27th Street site. Stations should be at least 2.5 miles apart, said Steve Abrams, executive director of the South Florida Regional Transportation Authority, the agency that oversees Tri-Rail.

Mayor Francis Suarez, however, would like to see as many stations within Miami’s rail corridor as possible. “To me, this is the densest corridor in Florida,” Suarez said. “Maybe the normal rules don’t apply.”

Although Xavier Suarez was enthusiastic about the idea of a station at Northeast 62nd Street, his son didn’t endorse any sites in particular.

Gladeview-Liberty City

During the second meeting last week, Xavier Suarez proposed that Tri-Rail use a set of FEC tracks that intersect the South Florida Rail Corridor at about Northwest 37th Avenue and 74th Street in Gladeview. Those tracks continue running eight miles east to the “Y” railway junction at Northeast Second Avenue and Northeast 73rd Street. Suarez also proposed the construction of at least one Tri-Rail station along the east-west corridor, with the first being built on county land near Northwest 27th Avenue and 75th Street in the Gladeview-Liberty City area, the site of the stalled Poinciana Industrial Park project.

Al Hardemon, uncle of Miami commissioner Keon Hardemon, said such a rail connection would be “opportunity for Model City and Liberty City.” Monestime also backed the idea.
Aileen Boucle, executive director of the Miami-Dade Transportation Planning Organization, said both proposals could be heard by the agency as early as Nov. 21. Tri-Rail will need to get Virgin Trains USA’s cooperation to operate along the main FEC tracks east of I-95, but it has already received permission to operate between MiamiCentral and the Y junction near 73rd Street, said Jose Gonzalez, senior vice president of Florida East Coast Industries, a subsidiary of the New York-based private equity firm Fortress Investment Group that operates Virgin Trains.

So far, the agency that oversees Tri-Rail has yet to present any new Tri-Rail station plans to Virgin Trains. “There are a lot of these property owners that are having these discussions, and there are a lot of proposals, but they haven’t put it into a process,” Gonzalez said.

And before any station can be built, there needs to be funding. Abrams said his agency barely has enough funds to run a train system at its current 18 stations along the South Florida Rail Corridor.

“To me, it’s ‘show me the money,’ and we would be glad to work on any of this or all of this,” Abrams told The Real Deal. “But they have to show how it’s going to be financed.”

The post Developers, ex-mayor push for rail expansion in Wynwood, Little Haiti and Liberty City appeared first on The Real Deal Miami.

One Ocean

Allegations of shoddy construction at a Related Group development in South Beach, where its chairman and CEO Jorge Pérez is trying to sell his penthouse, are piling up.

A recent lawsuit filed in Miami-Dade Circuit Court accuses Related, architects Sieger Suarez, general contractor Plaza Construction of Florida and three subcontractors of failing to address numerous construction defects inside two units purchased by Auckland Properties 005 LLC at the 50-unit development, at 1 Collins Avenue in the South of Fifth neighborhood.

The allegations come seven months after the One Ocean Condominium Association also sued the developers and companies involved in the project’s construction for alleged construction defects.

Related’s head, Pérez, owns a four-bedroom penthouse at One Ocean. He’s attempting to sell the unit, which he closed on in 2016 for $4.2 million, for a now-reduced price of $11 million.

Lana Naghshineh, the attorney for Auckland Properties 005, said her client said Related and Plaza have failed to fix plumbing issues, improperly installed light fixtures, a non-working spa pump, parking spaces that are too small and other deficiencies covered by warranty.

“It was a terrible investment for my client,” Naghshineh said. “We tried for a year to get Plaza and Related to work with us. They promised to make repairs and they didn’t do it. It’s not fair.”

Representatives for Related and Sieger did not respond to requests for comment.

A Plaza spokesperson said the company met its requirements. “To the extent that Plaza Construction has warranty obligations, we always endeavor to respond to such requests,” the spokesperson wrote via email. “In this instance, Plaza Construction timely and properly responded to the claims.”

According to the complaint, Auckland Properties 005 entered into a purchase agreement in 2013 for two units that were combined during construction and two tandem parking spaces at One Ocean. The company closed on the purchase three years later. Property records show Auckland Properties 005 paid $8.3 million for the two units. The LLC is tied to Hayworth Global Real Estate Ltd. and lists a Brickell address.

The lawsuit claims vehicles cannot fit in the tandem space because an adjacent concrete wall prevents cars from entering and exiting properly. In addition, the combined unit has unfinished interior drywall, low water pressure coming out of a bathroom showerhead and kitchen faucet, light fixtures installed in a crooked manner and a non-functioning spa pump, the complaint alleges.

The condo association filed suit in April, alleging it discovered deficiencies in the mechanical, electrical, plumbing and life-safety components of One Ocean. Corrosion on sliding glass doors; cracked stucco, walls, ceilings, balconies and masonry; and deteriorated and defective balcony railings are among the alleged examples of shoddy construction.

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