Related Group allegedly jilted investors in waterfront West Palm resi project: lawsuit

Land sellers allege they were owed a cut of future condo sales until the developer converted plan to rentals

Miami /
Apr.April 20, 2022 06:35 PM
Jorge Pérez vs Stephen and Louise Kornfeld with a rendering of Icon Marina Village (Related Group, Getty, Wikipedia)

Jorge Pérez vs Stephen and Louise Kornfeld with a rendering of Icon Marina Village (Related Group, Getty, Wikipedia)

Investors who sold waterfront land to the Related Group for its Icon Marina Village development in West Palm Beach sued the condo developer, alleging they were cheated out of an agreement that would have given them nearly $13 million.

Stephen and Louise Kornfeld, and Jody Weissman filed the lawsuit against TRG North Flagler Venture and RD IMV Owner, affiliates of Miami-based Related. The three investors sold the site at 4334 North Flagler Drive to Related in 2005, property records show.

The planned 24-story, two-tower, 399-unit development is within a master-planned 19-acre assemblage where an additional 650 units could be built, near the superyacht marina that Wayne Huizenga Jr. sold last year to Safe Harbor Marinas.

In a complaint filed this month in Miami-Dade Circuit Court, the Kornfelds and Weissman allege that Related fraudulently transferred its assets from TRG North Flagler Venture to RD IMV Owner to avoid paying them. The lawsuit centers on the way the partners and Related structured the sale.

Related’s TRG North Flagler took over the site and paid off the sellers’ $3.4 million mortgage. The entity also made a partial cash payment to the sellers, and agreed to give them a cut of future cash flow generated by the sales of the condo units, according to the complaint. Through a promissory note, TRG North Flagler would make back-end payments of at least about $1.2 million, plus 8 percent interest, and up to about $3.7 million, plus 8 percent interest, if the project’s sales approached $100 million.

In the complaint, the sellers’ attorney, Jason Kellogg of Levine Kellogg Lehman Schneider + Grossman, states that his clients had “declined to pursue lucrative, up-front cash transactions with other reputable buyers” — to instead work with Related.

Related broke ground on the luxury rental project last year, records show. The developer tapped Balfour Beatty to handle construction. Related’s RD IMV Owner also closed on $95 million in construction financing from Santander Bank last year. The project sits on a 5-acre site and will include a shared courtyard with a pool and beach club.

“In an attempt to avoid paying Plaintiffs the nearly $13 million they are owed under the Note, Related has secretly and fraudulently transferred the project’s assets to a new single-purpose entity,” the complaint alleges. “It has also changed the project from condominium units to rentals, cutting off the source of repayment as set forth in the Note.”

Matt Allen, executive vice president and COO at Related, signed the note, which is dated June 2005. Half of the proceeds were owed to Weissman and half to the Kornfelds, according to the agreement.

A spokesperson for Related declined to comment.

The luxury residential market for condos and homes, as well as rentals, has boomed in West Palm Beach, and Related has been expanding in the city. In November, Related and billionaire Teddy Sagi’s Globe Invest, along with their partner BH Group, formed a joint venture to invest in developer Michael Masanoff’s Transit Village, a $500 million, 10-acre project planned for the western side of downtown West Palm Beach.

Related, led by billionaire Jorge Pérez and his sons Jon Paul and Nicholas Pérez, had previously shied away from Palm Beach County, where New York-based Related Companies has a big presence. Related Cos. is led by billionaire Stephen Ross, who owns a minority stake in Related Group. Both firms are expanding rapidly in South Florida.





    Related Articles

    arrow_forward_ios
    From left: Oak Row Equities' David Weitz and Erik Rutter with Edgewater
    Oak Row Equities plans 400-unit apartment, office tower in Edgewater
    Oak Row Equities plans 400-unit apartment, office tower in Edgewater
    Here are the resi projects planned for downtown Fort Lauderdale
    Here are the resi projects planned for downtown Fort Lauderdale
    Here are the resi projects planned for downtown Fort Lauderdale
    13th Floor's Arnaud Karsenti and Wexford's Joseph Jacobs and Philip Braunstein with rendering of The Residences of Palm Beach West (13th Floor Investments, Wexford Real Estate Investors, Arquitectonica)
    13th Floor, Wexford propose 25-story tower in downtown West Palm
    13th Floor, Wexford propose 25-story tower in downtown West Palm
    The Park at Sheffield apartment complex at 15601 Southwest 137th Avenue in southern Miami-Dade County (Google Maps, The Park at Sheffield)
    Fruchtlanders pay $61.5M for apartment complex near Zoo Miami
    Fruchtlanders pay $61.5M for apartment complex near Zoo Miami
    From left: Harbor Group International's Jordan E. Slone and T. Richard Litton Jr. (sellers); Cottonwood Residential's Daniel Shaeffer and Chad Christensen; 4411 North Federal Highway in Pompano Beach (Cottonwood Residential, Harbor Group International, Google Maps, iStock)
    Cottonwood buys Pompano Beach apartment complex for $95.5M
    Cottonwood buys Pompano Beach apartment complex for $95.5M
    From left: The Estate Companies' managing principal Robert Suris and principal Jeffrey Ardizon along with a rendering of Soleste Pompano Beach and a sitemap for Soleste Hollywood Boulevard (The Estate Companies)
    Estate Companies’ Pompano Beach, Hollywood apartment projects advance
    Estate Companies’ Pompano Beach, Hollywood apartment projects advance
    Centro Miami
    Harvey Hernandez sells Centro Miami units for $3M, avoiding foreclosure
    Harvey Hernandez sells Centro Miami units for $3M, avoiding foreclosure
    Mayor Shlomo Danzinger and a rendering of Fort Partners’ Hillcrest by the Sea (Facebook, iStock, rendering by O' Donnell Dannwolf & Partners Architects)
    Town of Surfside sued after approving project next to aging condo building
    Town of Surfside sued after approving project next to aging condo building
    arrow_forward_ios

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

    Loading...