The Real Deal Miami

Surfside co-op owners sue to stop $21.5M deal with Fort Capital

Suit alleges better offer from Transamerican Development Group

August 19, 2015 12:45PM
By Francisco Alvarado

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Hillcrest by the Seas at 9165 Collins Avenue in Surfside

In a new legal fight that highlights demand for waterfront land, minority owners in a Surfside cooperative are looking to block the $21.5 million sale of the building’s majority shares to the Miami-based real estate investment firm Fort Capital Management.

Surfside Group LLC and William Matouk are suing Hillcrest by the Seas Associates, which is the association that oversees the converted apartment building at 9165 Collins Avenue.

According to a complaint filed in Miami-Dade Circuit Court on Aug. 14 and obtained by The Real Deal, Surfside Group and Matouk accuse unidentified members of the co-op of conspiring with one another to accept Fort Capital’s offer, despite an alleged better offer from another Miami-based real estate investment firm, Transamerican Development Group.

Lawyers for Surfside Group and Matouk also sought an injunction to stop a vote by the Hillcrest co-op owners to approve the Fort Capital deal, scheduled for 3:30 p.m. on Wednesday. Fort Capital, developers of the Surf Club Four Seasons nearby, needs approval from 75 percent of the co-op members for the sale to go through. 

“The transaction contemplated is replete with inequities, problems, and improprieties that call for temporary and permanent relief,” the lawsuit states. “Second, the Fort Capital offer is substantially inferior to the Transamerican offer on multiple terms.”

According to the civil court docket, Hillcrest By The Seas Associates has not been served with the complaint.

Merrick Gross, a shareholder in the Miami office of law firm Carlton Fields Jorden Burt representing the plaintiffs, said he could not comment without first obtaining permission from his clients. Robert Elias and William McCullough, attorneys for Hillcrest by the Seas and Fort Capital, respectively, did not return messages seeking comment. Ramzi Achi, a Fort Capital principal, did not respond to a voicemail requesting comment.

The complaint alleges Transamerican offered to pay up to $22.5 million for 75 percent or more of the co-op’s shares. Fort Capital’s $21.5 million offer came after and with conditions, the lawsuit states.

For instance, the co-op was also required to sell Hillcrest’s ground lease to SC Property Acquisitions, a separate entity controlled by Fort Capital for the $21.5 million deal to go through, according to a proposed merger agreement between Hillcrest and Fort Capital that is attached to the lawsuit.

Matouk and Surfside Group, a Doral based corporation listing Manuel and Rocio Joels as managers, allege members of the co-op have not been able to review the merger agreement and an escrow holdback agreement for $50,000 because they have not been provided copies.

According to Miami-Dade property records, Matouk owns two units and Surfside Group owns one unit at Hillcrest.

Albert Benalloun, Transamerican principal, told TRD that his firm — which is not a party in the lawsuit — spent months working out terms with Hillcrest By The Seas Associates. “We made a good faith offer,” Benalloun said. “After making it, we were informed that they were moving on with another offer from Fort Capital.”

He said the Hillcrest building is one of the few existing properties available for sale in Surfside. “It’s becoming a very hot market,” Benalloun explained. “There is a lot of interest in the area but no more vacant land.”

Fort Capital’s Surf Club Four Seasons , designed by Richard Meier & Partners, is currently under construction at 9011 Collins Avenue. Nearby, the Seaside Terrace Condominium, at 9241 Collins Avenue, also is expected to be demolished and redeveloped. The Miami-Dade County Commission in May overturned the building’s historic designation.