Prudential Insurance sued over $55 million One Broadway loan auction

Jul.July 07, 2011 04:30 PM

Real estate investment company Van Herk Group Real Estate Group is suing Prudential Insurance, alleging it was the winning bidder of an April auction on the loan of Brickell rental tower One Broadway.

[Updated at 5:16 P.M.] In an action filed in Miami-Dade Circuit Court June 1 and removed to the Southern District of Florida June 20, Van Herk claims it was changing euros into dollars in advance of closing when Prudential, which holds the loan on the property, refused to close on the loan sale. Prudential filed a motion to dismiss June 27, arguing that it withdrew the asset from the sale prior to approving, executing and delivering a written agreement to any of the bidders.

One Broadway is a rental project of Alan Ojeda’s Rilea Group, which also developed the adjacent office tower 1450 Brickell. Ojeda could not be reached for comment.

According to the complaint, Van Herk, which is part of Dutch firm Van Herk Groep, a Dutch commercial real estate firm, claimed that it engaged in the auction process by submitting a bid during a bidding process in April and that same month, a Prudential agent informed it by email that it had been “selected to participate in a Best & Final Round for the One Broadway Loan Sale.”

After submitting a higher bid of Van Herk claimed that it was informed that Prudential had “no issue” as to Van Herk’s nonmaterial changes, and that the loan sale agreement needed “wordsmithing.” If Van Herk raised its final bid to 101 percent of the loan’s outstanding principal, Prudential would sell the loan upon receipt of payment.

Van Herk says it submitted its final bid for $54.43 million, that it was informed it was the “successful bidder” and received a closing contact sheet. On May 11, Prudential’s agent allegedly notified the buyer that it was refusing to close.

According to the “Bidders Information Package” supplied by Prudential to Van Herk, however, the “seller reserves the right to accept or reject any or all bids on the loan, regardless of bid terms or to withdraw the asset from the sale, in its sole and absolute discretion, for any reason or for no reason at any time.”

Given this language, Prudential argued, there is no basis for the existence of a contract.

The company is seeking a court order that would require Prudential to hand over the loan, which is valued at $55.7 million.

Van Herk’s attorney, William McCaughan, a partner at K&L Gates, declined to comment. Prudential’s attorney, Philip Kantor of Quintairos, Prieto, Wood & Boyer, did not respond to a request for comment. Van Herk’s Rotterdam office could not be reached for comment.

A Prudential spokesperson said it was the company’s policy not to comment on active litigation.

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