American Legion project’s developers allegedly stiffed Berkadia of $500K: lawsuit
Brokerage claims it helped secure $51M construction loan and didn’t get paid
Berkadia is suing the developers of an American Legion project under construction in Miami’s MiMo District, alleging nonpayment of a $500,000 “success fee.”
Berkadia filed suit against ACRE GCDM Investments and Montreal-based real estate development firm Quadreal Property Group in Miami-Dade Circuit Court this month for breach of contract and unjust enrichment in connection with a $51 million construction loan the project builders secured from TD Bank in November.
ACRE GCDM, a partnership between Asia Capital Real Estate, Global City Development and Midtown Group, is developing a 237-unit apartment complex on 3.5 acres on the former site of an American Legion outpost at 6445 Northeast Seventh Avenue. The project, known as MiMo Bay Apartments, includes a new 15,000-square-foot American Legion facility and 435 parking spaces.
Brian Pearl, a Global principal, as well as a Berkadia spokesperson declined comment. Representatives for Asia Capital Real Estate and Quadreal did not respond to voicemail messages seeking comment.
The lawsuit alleges that Berkadia introduced the development partnership to Quadreal, which became a project partner and a guarantor on the TD loan.
On October 3, 2016, Pearl signed an agreement prepared by Berkadia senior managing director Charles Foschini, in which ACRE GCDM would pay the commercial mortgage brokerage a 1% success fee if it succeeded in securing a bank lender within one year, according to the suit. The agreement, which is attached as an exhibit to the lawsuit, also required ACRE GCDM to pay the success fee if it secured a construction loan within three months after the contract expired.
Berkadia contacted at least 48 lenders, obtained at least eight financing quotes and worked directly with TD Bank to secure the $51 million loan starting in November 2016, according to the suit. One month later, when the bank requested ACRE GCDM obtain a “substantial guarantor,” Berkadia sought out Quadreal to help the developers because the Montreal firm was more financially secure, the lawsuit alleges. Berkadia claims it supplied Quadreal with information on the project that the company used to formulate its decision to join the MiMo Bay development.
Through Oct. 5, 2017, Berkadia “worked diligently in the application process” with TD Bank and ACRE GCDM, including several in-person meetings, refining details of the financing terms, and addressing the bank’s inquiries, the lawsuit states.
Berkadia said ACRE GCDM ceased all communications and never informed the company that it was terminating the agreement, according to the suit. A year later, on Nov. 12, ACRE GCDM closed on the TD bank loan. Berkadia claims that it is entitled to its success fee, which totals $500,000, because of the work the firm put in preparing the application, securing Quadreal as a guarantor and negotiating the terms on ACRE GCDM’s behalf.