Australian investors sue East End Capital over downtown Miami office building

Investors are seeking more than $50M in damages tied to New World Tower

Miami /
Feb.February 02, 2021 10:30 AM
Jonathon Yormak and New World Tower at 100 Biscayne Boulevard (Google Maps)

Jonathon Yormak and New World Tower at 100 Biscayne Boulevard (Google Maps)

East End Capital and its principals, Jonathon Yormak and David Peretz, allegedly misled a pair of Australian investors into financing the acquisition and renovation of a money-losing downtown Miami office building, according to a recently filed civil lawsuit in New York City.

Errol Dorfan and Kim Davis, through their company 100 & 130 Biscayne LLC, are seeking more than $50 million in damages. That represents the value of their initial investment, lost profits and management fees paid to East End Capital affiliates that the two investors want to recoup, according to the lawsuit.

Dorfman and Davis accuse East End Capital and its principals of making fraudulent misrepresentations and grossly mismanaging their roughly $28 million investment in New World Tower, a 30-story office building at 100 Biscayne Boulevard, built in 1965. Dorfman’s and Davis’ entity owns 80 percent of the property, while East End owns the remaining 20 percent. The partnership bought the building for $84 million in 2016.

Eric. B. Fisher, attorney for Dorfman and Davis’ entity, did not respond to phone and email messages requesting comment. In an emailed statement, an East End spokesperson said the company vehemently denies the allegations. “We have a long tradition of revitalizing assets and delivering results for our investors,” the statement said. “Our prior record speaks for itself and people who have worked with us know who we are.”

East End, a Madison Avenue-based real estate investment firm, is one of the most active companies in Miami’s trendy Wynwood neighborhood. In a partnership with the Related Group, East End co-developed and co-owns apartment building Wynwood 25 and the adjacent office building Wynwood Annex. The company also owns Wynwood Arcade, a 25,000-square-foot retail complex, and recently unveiled plans to develop a co-living apartment building called Wynwood Foyer.

Five years ago, East End convinced Dorfman and Davis to bankroll the purchase and renovation of New World Tower by claiming Yormak and Peretz would convert the property from a Class B to a Class A office building and increase occupancy from 81 percent to 92 percent, the New York lawsuit alleges. In addition to providing $22 million toward the $84 million purchase price, 100 & 130 Biscayne provided an additional $6 million for building improvements. The partnership also paid East End affiliates $1.9 million for managing the property, overseeing construction and annual asset management fees, the lawsuit states.

Dorfman and Davis claim those promises to make New World Tower a prime office building never materialized. “Although [100 & 130] Biscayne put an additional $5.2 million into the project to pay for improvements in response to capital calls, tenant occupancy did not increase, contrary to defendants’ representations,” the lawsuit states. “In fact, occupancy levels had decreased since acquisition and, consequently, leasing revenue was well below all forecasts and budgets supplied by defendants.”

By 2019, the partnership had existing liabilities and commitments totaling $5.2 million, and an anticipated operating cash deficit of $1.4 million, the lawsuit states.

The lawsuit also accuses East End, Yormak and Peretz of attempting to sell New World Tower for $101 million to GreenOak Real Estate, which partnered with East End in 2018 to buy a Miami Beach office building. However, 100 & 130 Biscayne objected to a stipulation that their partnership with East End cover the costs of repairing an elevator in New World Tower’s garage. The deal fell apart on the day it was supposed to close in July of last year, according to the lawsuit.

“Even if defendants’ plan to sell the project to GreenOak had succeeded, [100 & 130] Biscayne estimates that it would have lost approximately $12.9 million of the value of its equity investment and would have been deprived of any return,” the lawsuit states.


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