Barry Shy-controlled LLCs countersue Laguna Point over LA apartments

Finger-pointing focuses on breach of portfolio sales contract for $400M

Barry Shy-Controlled LLCs Countersue Over LA Apartment Sale

Laguna Point Properties's Greg Campbell, Barry and Rommy Shy with 215 West 6th Street (Connect Group Media, Getty, Royalty Realty, Google Maps)

Isabella Farr

Dec 8, 2023, 5:00 PM

A group of limited liability companies controlled by Barry Shy has hit back at Laguna Point Properties, arguing they didn’t breach a $400 million agreement to sell a portfolio of apartment buildings in Downtown L.A. — Laguna Point did.

The LLCs have filed a cross-complaint against Laguna Point, claiming the firm kept some of the ground-floor retail and failed to pay its share of the rents for five and a half days in April, according to court records.

The entities — named Manhattan Loft, Main SB, 6th St Loft, Vault Lounge, 600 Tower and 1200 Management — are run by either Shy or his sons Rommy Shy or Eric Shy, according to California state business records.

Laguna Point bought the roughly 1,000-unit portfolio in early 2022 for about $400 million, records show, using a $329 million loan from MF1 Capital, a prominent multifamily lender.

The addresses of the properties are: 548, 600 and 650 South Spring Street, 111 West 7th Street and 215 West 6th Street — all within Downtown’s Historic Core district.

“The timing could not be better, given the recent gains in occupancy and rent momentum,” Garrett LaBar, Laguna Point’s head of acquisitions, said at the time.

A couple months later, Laguna Point filed a lawsuit against the LLCs. The Orange County-based investment firm alleged the LLCs failed to disclose a threat of tenant litigation, piles of utility bills and violations of city fire codes, when it sold the properties to Laguna Point.

Laguna Point eventually added Barry, Rommy and Eric Shy as individual defendants in the lawsuit.

Laguna Point does not own the properties anymore. After defaulting on MF1 Capital’s loan, Miami-based Fifteen Group swooped in to assume the debt, taking the properties with it.

But Laguna Point and the LLCs are still embroiled in their legal battle.

The LLCs are claiming that as part of the deal, they were set to keep the commercial, ground-floor units. But Laguna Point, the cross-complaint argues, took “possession” of part of one retail unit and refused to vacate. It also refused to pay $6,000 for security services.

As a result, Laguna Point has rendered the commercial units “unmarketable for sale,” according to the cross-complaint.

After offloading the Downtown L.A. buildings, Shy’s SB Properties moved some of its cash to Houston, buying up about 1,900 units across six buildings. According to county appraisals, the properties are valued at $372 million. Texas is a non-disclosure state, meaning buyers and sellers do not have to disclose sales prices.

Los Angeles