HFZ Capital off the hook for $6M in failed Shore Club South Beach deal

The win is an anomaly for the financially and legally embattled New York developer

Miami /
Jun.June 14, 2021 08:35 AM
HFZ’s Ziel Feldman with the Shore Club (Getty, Facebook via Shore Club)

HFZ’s Ziel Feldman with the Shore Club (Getty, Facebook via Shore Club)

HFZ Capital Group is off the hook from paying $6 million to the planned operator of the Shore Club in South Beach, following litigation tied to the companies’ failed deal.

HFZ Capital Group wanted to redevelop the property at 1901 Collins Avenue in Miami Beach into a condo-hotel, and signed luxury Brazilian hospitality brand Fasano to manage the revived project. In 2017, HFZ Capital canceled both its redevelopment plan and Fasano’s contract, in light of the slow condo market.

Fasano, through its affiliate HMI Holdco, sued HFZ’s affiliate, Shore Club Property Owner LLC, in 2019, claiming HFZ Capital did not meet the conditions that would allow it to forego a termination fee.

The only way HFZ Capital could skip payment was for failure to secure financing on reasonable and acceptable terms, only after working diligently to obtain a loan, according to court records.

Miami-Dade Judge Michael Hanzman decided HFZ Capital met these conditions.

Although its attempts to score a loan were “admittedly not Herculean,” HFZ Capital made “commercially reasonable – albeit not ‘perfect’ – efforts,” Hanzman wrote in his May 18 final judgment. Hanzman noted South Florida’s condo market at the time was “volatile.”

Shubin & Bass attorney John Shubin, who represents Fasano’s affiliate, said the group appealed. He declined further comment.

In the complaint, Fasano argued that HFZ Capital had not made its best efforts to secure a loan for the project, as at the time it scored financing for some of its other projects.

HFZ co-founder and principal Ziel Feldman did not return a request for comment. HFZ’s attorney, James Gassenheimer of Berger Singerman, said the ownership group welcomed the result and reiterated that unless it was able to obtain financing, it had the right to end the management agreement.

The 309-key Shore Club has not reopened since closing due to the pandemic. The plan was for the waterfront property to be converted into the first Fasano-branded project in the U.S. with 85 hotel rooms and 70 condos, named Fasano Hotel + Residences Shore Club Miami Beach.

Since then, Fasano opened a residence-hotel on Fifth Avenue in New York City. The Shore Club has yet to reopen.

In December, HFZ put the Shore Club property on the market for sale.

An affiliate of The Clark Estates, the family of the late newspaper publisher and businessman Stephen Carlton Clark, sued the Shore Club owner in March to block its sale without Clark Estates’ approval. According to the complaint, the Clark Estates affiliate is a half owner of Shore Club JV LLC, which in turn owns the hotel through Shore Club Property Owner.

Gassenheimer said the hotel is not currently on the market.

HFZ Capital’s win is an anomaly of sorts for the New York-based developer that has been embroiled in legal and financial woes.

In New York earlier this year, HFZ Capital lost control of four condo conversion projects, after a lender foreclosed on the junior mezzanine positions tied to the properties.





    Related Articles

    arrow_forward_ios
    141 East 89th Street, 250 East 73rd Street and 1594 3rd Avenue (Google Maps, LoopNet)
    Landlord fears his mother gifted him $50M tax liability
    Landlord fears his mother gifted him $50M tax liability
    Valerie Dillon and Arthur Becker with 465 Washington
    After battle with Becker, gallery owner sells Tribeca pad
    After battle with Becker, gallery owner sells Tribeca pad
    Pastor Gregory Fryer and the Immanuel Lutheran Church at 120 and 122 East 88th Street (Getty Images, Immanuel NYC, Jim.henderson, CC0, via Wikimedia Commons)
    Thou Shalt Not Sell: Lutheran group sues to stop church’s deals
    Thou Shalt Not Sell: Lutheran group sues to stop church’s deals
    212 Fifth Avenue, Thor's Joseph Sitt and Madison Equities CEO Robert Gladstone (Google Maps, Thor, Studio Scrivo)
    Thor sues insurer over Bob Gladstone’s alleged theft from 212 Fifth
    Thor sues insurer over Bob Gladstone’s alleged theft from 212 Fifth
    The door at 553 West 30th Street, Related's Stephen Ross and 15 Hudson Yards (Getty, Google Maps)
    Judge rejects “poor door” lawsuit at Related’s 15 Hudson Yards
    Judge rejects “poor door” lawsuit at Related’s 15 Hudson Yards
    Miki Naftali with 215 West 84th Street (Getty, Corcoran)
    Naftali takes hit in battle with UWS holdout
    Naftali takes hit in battle with UWS holdout
    Frank Pellegrino Jr. with Loews Miami Beach and Loews Hotel owner Jonathan Tisch (Rao's, Google Maps, Getty)
    Iconic NYC eatery Rao’s to open at Loews Miami Beach
    Iconic NYC eatery Rao’s to open at Loews Miami Beach
    Ascent Development’s Tien Vominh and Modern Spaces' Eric Benaim with 45-30 Davis Street (LinkedIn, Modern Spaces, Marvel Architects)
    Modern Spaces sues developer over LIC exclusivity agreement
    Modern Spaces sues developer over LIC exclusivity agreement
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...