Judge Gives Dan Kodsi Two Months to Pay $35M Legacy Loan

Developer Dan Kodsi may be one step closer to resolving a foreclosure lawsuit brought by his lender for the Legacy Hotel & Residences project at Miami Worldcenter.

An order entered by Miami-Dade Circuit Court Judge Spencer Eig gives Kodsi’s Legacy MWC Trustee just over two months to pay its lender, New York-based Monarch Alternative Capital, more than $35 million, court filings show. That would satisfy the mortgage backing the downtown Miami property.

Judge Eig’s order signs off on the agreement reached between the developer and lender. It grants the developer’s motion for an emergency injunction, which is required for a potential refinancing of the loan. Kodsi, CEO of Royal Palm Companies, said in a July 31 hearing that he is working on a $390 million refinancing.

The legal drama unfolded in court this summer after Monarch took over the loan from Larry Silverstein’s Silverstein Capital Partners on June 6. About a month later, the Monarch affiliate sued to foreclose, alleging that the developer owed $31.9 million in unpaid debt backing the partially built 50-story mixed-use condo and hotel tower at 942 Northeast First Avenue in downtown Miami.

Construction of Legacy stalled last year. The building is expected to have 310 short-term rental-friendly condos, a 219-key hotel and a Blue Zones medical and wellness center. Kodsi launched condo sales in 2019, and the condo portion sold out during the pandemic for an estimated $160 million.

Judge Eig, in his order entered Aug. 22, stated that the developer and lender agreed to have the developer post a $32 million surety bond within a month. Within 75 days, the developer has to pay about $35.1 million, plus accrued and unpaid interest, and late fees. That deadline is about Nov. 5.

If both of those deadlines are met, Monarch “shall satisfy the subject mortgage” under Florida laws governing mortgages.

Kodsi declined to comment, as did attorneys for the developer and lender. The judge’s order bans the developer, lender, their employees, agents, representatives or attorneys from making any public statements about the case.

The developer hired Kevin O’Grady, chairman of Concord Summit Capital, to find financing for the project, according to a transcript of a July 31 hearing. O’Grady said during the hearing that his firm has identified potential lenders. The new financing could be a combination of $235 million in C-PACE financing and $160 million from Sculptor Real Estate, likely referring to Sculptor Capital Management, the filing states.

Monarch sought $67.5 million from the developer, which includes fees, interest and a $32.3 million return differential, the developer’s counterclaim alleges. The return differential, or the minimum return calculated by the lender, is “premised on the lender funding the full $290 million note” and is due in June of next year, the developer alleges in its counterclaim to the foreclosure suit, filed this summer.

Kodsi’s Royal has worked with Monarch before. The lender is a partner in Royal Palm’s Coco Beach development and a project in Puerto Rico.

The developer alleges that Monarch “committed serious misconduct, including an alleged fraudulent misrepresentation, bank fraud and civil conspiracy — all in an effort to ‘wipe out the equity’ of Royal Palm’s Coco Beach affiliate,” Royal Palm’s counterclaim alleges. But Monarch was allegedly forced to back down, which is when it shifted its attention to the Miami Worldcenter project, Royal Palm alleges.

Silverstein Capital Partners provided the developer with $340 million in construction financing for Legacy in late 2021, but Silverstein only funded a portion of the loan. Kodsi said during the July 31 hearing that only $30 million was funded.

If Kodsi can refinance the loan, he will likely next work on restarting construction. He previously said that Royal Palm affiliates have more than $140 million in equity in the Legacy Miami Worldcenter project, and condo buyers have provided about $50 million in deposits.

The partially constructed building is part of the 27-acre, $6 billion mixed-use Miami Worldcenter development. Miami Worldcenter Associates, a joint venture led by CIM Group, Art Falcone and Nitin Motwani, is the master developer of the master-planned project and has sold sites to other developers. Kodsi’s Royal Palm also developed Paramount Miami Worldcenter, a condo tower, which was completed in 2019.