A developer planning a medical office building in Hallandale Beach was hit with a $5.8 million foreclosure suit on the site.
The case comes as debt woes, including foreclosures and bankruptcies, continue in South Florida amid elevated interest rates, skyrocketing insurance, an office and apartment leasing slowdown and other economic headwinds.
Fort Lauderdale-based OptimumBank sued entity SE 9 St Holdings, which ties to three Hollywood-based land trusts, as well as attorney Justin Zeig and investor Eyal Mehaber, for allegedly defaulting on the loan for the 1.4-acre site at 400 Southeast Ninth Street, according to the complaint filed late last month and real estate database Vizzda. Zeig and Mehaber signed loan guarantees.
OptimumBank provided the financing in 2023. The loan matures in 2035 and requires interest-only payments until April, according to a mortgage record. It has a fixed interest rate of 8.55 percent until April of next year, when a new rate kicks in equal to the one-year Treasury Bill plus 3.25 percent, with the floor of 5 percent, the record shows.
The suit is for $5.8 million, including interest and fees. The complaint doesn’t specify when the default occurred. Mehaber declined to comment. Zeig and OptimumBank’s attorney didn’t immediately respond to a request for comment.
Mehaber, who gives investment advice and talks about his real estate plays on Instagram, is president of Hollywood-based value-add investment, property management and development firm Coastline Management Group. The Hallandale Beach site is a personal investment for Mehaber and is entirely unrelated to Coastline, according to a company representative.
The proposed project on the site is an eight-story building with 76,100 square feet of medical offices and a garage, according to a Hallandale Beach Department of Sustainable Development flyer provided by Vizzda. Construction has not started.
ST 9 St Holdings paid $4.4 million in 2022 for the site on the southeast corner of Southeast Ninth Street and Southeast Third Avenue, property records show. The seller was Miami-based LV Lending, which had seized the property after filing a $3.3 million foreclosure against the previous owner. The site consists of seven lots, two with a pair of single-family homes and the remainder vacant.
Elsewhere in South Florida, Miami Beach-based lender Safe Harbor Equity filed a foreclosure in June against developer Celal Ozkan’s affiliate on a multifamily development site at 16300 Northeast 19th Avenue in North Miami Beach. The foreclosure is tied to a $7.7 million loan. Ozkan, who plans a 19-story, 341-unit tower on the site, first sued Safe Harbor in April, alleging usury and manufacturing default claims. Ozkan’s affiliate filed for Chapter 11 reorganization late last month, pausing the pending litigation between the borrower and lender.
Last month, Boca Raton-based Penn-Florida Companies wiggled out of a foreclosure auction on a Boca Raton multifamily development site by filing for bankruptcy. Lender Blackstone Mortgage Trust had filed foreclosure in December on a $145 million loan for the site at 101 East Camino Real, where Penn-Florida plans a 14-story, 366-unit apartment building.
Editor’s note: This article has been updated to clarify the Hallandale Beach site is a personal investment for Eyal Mehaber.