HFZ faces lawsuit, unpaid tax bill for Shore Club South Beach hotel

Legal and financial troubles mount at prime oceanfront property

Miami /
Mar.March 17, 2021 05:30 PM
HFZ's Ziel Feldman. (Getty, Shore Club)

HFZ’s Ziel Feldman. (Getty, Shore Club)

A partner in HFZ Capital Partners’ Shore Club in South Beach filed a lawsuit against the hotel’s owners, as HFZ’s financial and legal troubles continue to mount.

A company tied to The Clark Estates, the family of the late newspaper publisher and businessman Stephen Carlton Clark, is suing the Shore Club’s owners to block the sale of the hotel without the approval of The Clark Estates entity.

The lawsuit follows a February notice from the Florida Department of Revenue, which issued a warrant for nearly $441,000 in unpaid sales and use taxes.

The hotel, a prime waterfront property at 1901 Collins Avenue in Miami Beach, has fallen into disrepair and has been shuttered throughout the pandemic.

SC Philips Clark LLC filed the lawsuit last week in Miami-Dade Circuit Court against Shore Club Managing Member LLC, Shore Club JV LLC and Shore Club Property Owner LLC. The lawsuit states that the Clark Estates entity owns 50 percent of Shore Club JV LLC, which in turn owns the hotel through Shore Club Property Owner.

HFZ, led by Ziel Feldman, did not immediately respond to requests for comment.

In the complaint, SC Philips Clark references The Real Deal’s previous reporting, including an article published in December that revealed that New York-based HFZ had the oceanfront property on the market for sale with the brokerage Newmark.

The HFZ entity paid more than $175 million for the hotel in 2013. Management company Sbe had been operating the hotel since it acquired Morgans Hotel Group in 2016.

HFZ had originally planned to redevelop the historic 309-key hotel into a luxury condo development branded by Fasano, but canceled plans for the project in 2017 as a result of the slow condo market.

In 2019, Virgin Hotels proposed to pay $235 million for the Shore Club, with plans to invest another $100 million into transforming the property. That deal fizzled out.

The complaint alleges that HFZ has not held required monthly meetings with its partner, and that it has made bigger decisions regarding the property without the consent of SC Philips Clark.

The suit is similar to a complaint filed in New York in 2018, in which SC Philips Clark sued the same entities, alleging that they failed to provide monthly, quarterly and annual financial and lender reports, condo status reports and failed to fulfill marketing obligations.

Earlier this year, HFZ experienced additional financial difficulties. The developer lost control of four Manhattan condo conversion projects. CIM Group, one of HFZ’s lenders, foreclosed on the junior mezzanine positions tied to the properties.

And in December, Monroe Capital, one of the firm’s lenders, foreclosed on HFZ’s stake in a national industrial portfolio.

Also in late December, Cedar Trading, a gourmet foods supplier, sued the Shore Club to collect $13,363 in allegedly unpaid goods, including whole duck, raw shrimp, and four gallons of Kewpie mayonnaise, according to Miami-Dade court filings. A final judgment for that amount was entered in favor of Cedar Trading in February.





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