Brooklyn buyer sues industrial firm O’Donnell over failed Hialeah deal

Seller was allegedly supposed to renovate facility before $11M sale closed

Miami /
Mar.March 11, 2022 09:45 AM
6501 Northwest 37th Avenue (Google Maps)

6501 Northwest 37th Avenue (Google Maps)

California industrial real estate investor and developer The O’Donnell Group was slapped with a lawsuit alleging it tried to inflate the sale price of a Hialeah property above the prospective buyer’s agreed amount.

The buyer, Brooklyn-based Sound Around, sued two O’Donnell Group ownership affiliates, Hialeah Last Mile Fund VII and Hialeah Last Mile, alleging that they did not finish repairs to the building and then tried to “indefinitely delay” the work, with the “ill-intended” purpose of extorting millions of dollars more from the buyer, according to the lawsuit filed last week in federal court in Miami.

Sound Around entered a contract with Hialeah Last Mile to buy the building at 6501 Northwest 37th Avenue in unincorporated northwest Miami-Dade County for $11.4 million. Under the March 2021 agreement, the sellers had to renovate the interior and exterior of the building, which was expected to be finished in the fall for the deal to close by the end of 2021, according to the complaint.

In a December letter to Sound Around’s broker, Douglas O’Donnell of the O’Donnell Group wrote that issues arose with the inability to connect the facility to a water utility provider.

Although historically the city of Hialeah serviced the area, the city and the county were locked in a dispute that hindered the seller’s ability to connect to water and renovate the building, O’Donnell wrote.

He also cited delays created by the pandemic. “Indeed, no one could have ever imagined the scope of these problems,” O’Donnell added in his letter, saying the sellers wouldn’t proceed with the deal and would return the buyer’s deposit.

In a follow up February letter, Hialeah Last Mile’s attorney Robert Salkowski said that the sellers only would proceed with the deal if the price is increased by $3 million to compensate for the unexpected costs.

Sound Around countered in its complaint that it has ended up spending hundreds of thousands of dollars more to rent a warehouse space elsewhere. It is seeking more than $1 million in damages and is asking the court to force Hialeah Last Mile to finish the repairs and close the deal for the agreed price.

The O’Donnell Group, based in Newport Beach, bought the 76,227-square-foot facility spanning 2.4 acres for $7.6 million in 2020, records show.





    Related Articles

    arrow_forward_ios
    A photo illustration portraying the skyrocketing rent growth for Miami's industrial market (iStock)
    Rising rents: Miami’s industrial market leads nation with highest annual rate hike: report
    Rising rents: Miami’s industrial market leads nation with highest annual rate hike: report
    Real estate investor Michael Klinger and 56 Bal Bay Dr, Bal Harbour (Zillow, Jon Mann/Jills Zeder Group)
    Investor buys waterfront Bal Harbour mansion for $15M, plans to renovate it and flip it for $30M
    Investor buys waterfront Bal Harbour mansion for $15M, plans to renovate it and flip it for $30M
    Link Logistics' Luke Petherbridge with 115.7-acre site at 21001 Northwest 27th Avenue (LinkedIn, Google Maps)
    Blackstone’s Link Logistics pays $291M for Calder’s horse racing track
    Blackstone’s Link Logistics pays $291M for Calder’s horse racing track
    EverWest Real Estate Investors' Rick Stone and Tyler Williams; rendering of the newly built industrial property at 10900 Northwest 146th Street in Hialeah Gardens (Commercial Property Group, EverWest Real Estate Investors, iStock)
    EverWest buys Hialeah Gardens industrial building for $43M
    EverWest buys Hialeah Gardens industrial building for $43M
    First Industrial Realty's Peter E. Baccile with 1801 North Andrews Avenue (First Industrial Realty Trust, Colliers, iStock)
    First Industrial picks up Pompano Beach manufacturing facility for $25M
    First Industrial picks up Pompano Beach manufacturing facility for $25M
    A photo illustration of Jade Signature (Compass Real Estate, iStock)
    Jade Signature closing tops Miami-Dade’s weekly condo sales
    Jade Signature closing tops Miami-Dade’s weekly condo sales
    South Florida homes
    South Florida home sales plunge in May, as prices continue rising
    South Florida home sales plunge in May, as prices continue rising
    Centro Miami
    Harvey Hernandez sells Centro Miami units for $3M, avoiding foreclosure
    Harvey Hernandez sells Centro Miami units for $3M, avoiding foreclosure
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...