Robert Rivani’s Black Lion and Mathieu Massa pulled out of their $82 million purchase agreement for Starwood Capital’s former headquarters in Miami Beach. And now the partners are in a legal fight with the seller, New York-based Nightingale Properties, over a $2 million deposit.
The cratered deal is the latest setback for Nightingale, which was counting on proceeds from the sale to pay back investors who allege the crowdfunding real estate firm misappropriated their funds.
Attorneys for Nightingale declined comment. Phillippe Lieberman, Black Lion’s attorney, said his client “complied in full with the terms of the purchase agreement,” but terminated the deal due to “failures of conditions precedent to a closing, including material misrepresentations by Nightingale Group, and its principal, Elie Schwartz.”
On Jan. 10, a Nightingale affiliate that owns the ground lease for Lincoln Place at 1601 Washington Avenue sued an entity managed by Miami-based Black Lion CEO Robert Rivani in Miami-Dade Circuit Court. The city of Miami Beach owns the land underneath the eight-story mixed-use building completed in 2002. From 2016 until 2022, the 140,000-square-foot Lincoln Place was home to the corporate offices of Barry Sternlicht’s Starwood Capital.
Nightingale alleges the Rivani-led entity defaulted on the purchase agreement by failing to close by a Nov. 30 deadline, and failed to obtain approval from the Miami Beach City Commission to transfer the ground lease. Nightingale is seeking to keep a $2 million deposit that Black Lion and Massa put in escrow, the complaint states.
Rivani’s entity countersued, alleging that Nightingale breached the agreement first by providing false statements that the firm was the 100 percent owner of Lincoln Place, according to a Jan. 17 counterclaim. Rivani and Massa are seeking the return of their $2 million deposit.
In reality, Nightingale’s stake in Lincoln Place is also partially owned by investors who put in $8.8 million via the online platform CrowdStreet to help buy the building in 2016, the counterclaim states. Nightingale and Hollywood-based JBL Asset Management, another minority partner, paid $80 million.
Furthermore, Nightingale allegedly failed to maintain a net worth of more than $15 million until the sale was completed, as required by the agreement, the counterclaim states. Nightingale also refused to extend the Nov. 30 closing date even though it was not the fault of Black Lion and Massa that the city of Miami Beach could not get the lease transfer approved in November.
Nightingale has been reeling since last summer when an independent trustee found that Schwartz, the company’s CEO, allegedly misappropriated tens of millions of dollars from CrowdStreet investors. The funds were supposed to be allocated into purchasing and renovating Lincoln Place and an Atlanta commercial property.
Schwartz allegedly used $12 million of those funds for First Republic Bank stock and options, prior to the bank’s failure, as well as diverted investor funds to make credit card payments and buy watches. In October, Schwartz reached a settlement to pay back $3 million to investors by the end of last year, followed by quarterly payments that will ultimately total $50 million.
Schwartz paid the $3 million to investors this month. To make investors whole, Schwartz is expected to sell personal assets, which may include a New York penthouse and a mansion in Englewood, New Jersey.