Chetrit Group is on the hook for more than $82 million, after a judge ruled in favor of its lender’s foreclosure of the shuttered Tides South Beach hotel.
The ruling is the latest in the case pitting an affiliate of Safe Harbor Equity against New York-based Chetrit. Safe Harbor Equity sued CG Tides and other Chetrit entities, as well as Meyer Chetrit, in February of last year, alleging that the developer stole $2 million in insurance money without the lender’s knowledge or consent, and allegedly defaulted on the loan.
Chetrit secured the $45 million loan in 2014 from Ocean Bank. Ocean Bank sold the debt to the Safe Harbor Equity entity in January of last year. The insurance money was to pay for damage to the Tides, a 45-key hotel at 1220 Ocean Drive, after Hurricane Irma hit in 2017. Miami Beach-based Safe Harbor is led by Rafael Serrano.
In a ruling on Friday, Miami-Dade Circuit Court Judge Judge Pedro Echarte Jr. stated that the Chetrit affiliate owes $82.1 million as of mid-October, plus attorneys’ fees and additional interest. That amount includes nearly $42 million in unpaid principal debt and nearly $48 million in interest.
Chetrit plans to appeal the foreclosure ruling, according to the firm’s attorney, Dennis Richard of Richard and Richard. Chetrit had financing in place to repay the mortgage before Safe Harbor acquired the loan, Richard wrote via email. He said that Chetrit spent $15 million on the project after the hurricane.
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Joseph Chetrit did not respond to a request for comment.
A spokesperson for Safe Harbor Equity said in a statement to The Real Deal that it is exploring its options for the property, but that it may complete construction and hire a hotel operator to “stabilize the property and bring it to market.”
Safe Harbor alleged that the insurance proceeds belonged to Ocean Bank, and by keeping the check without the bank’s approval, the Chetrit entities allegedly committed grand theft. Chetrit alleged that it notified Ocean Bank’s then-chief lending officer, Ralph Gonzalez-Jacobo, of the insurance check. Gonzalez-Jacobo died in late 2019, according to his obituary.
The loan was backed by the Art Deco hotel built in 1936, as well as the adjacent mixed-use building fronting Collins Avenue that Chetrit redeveloped.
The final judgment of foreclosure and damages comes about three months after the judge granted the lender’s partial summary judgment. Echarte ruled in September that Chetrit did breach its mortgage agreement by transferring the insurance funds to its company bank account and the personal bank accounts of Joseph and Meyer Chetrit without their lender’s consent or knowledge.
The judge also ruled at the time that the Chetrit entities breached their mortgage when they allowed their insurance coverage to lapse for months, and that they defaulted on the loan when they failed to pay it back by the extended maturity date of the end of 2020.
Chetrit is active across South Florida. This month, Chetrit was sued by an investor who alleges he was cut out of the firm’s deal to redevelop the Hollywood Beach Resort.
The company recently closed on an $82.5 million construction loan for its long-planned Collins Park Hotel project, also in Miami Beach. Kawa, a Hallandale Beach-based international asset manager, provided the financing, which replaced a $62.5 million construction loan provided by Maxim Capital last year.
In Miami Beach, Chetrit also owns the closed Miami Beach Resort, an oceanfront property at 4833 Collins Avenue, and it partnered with developer Ronny Finvarb to purchase the Macy’s store near Lincoln Road.
Last year, Chetrit sold a Miami Beach apartment hotel to its operator, Royal Stays Miami, for $42 million.