Michael Shvo has had his fair share of issues across his career as a broker and developer, only to walk away unscathed.
At 125 Greenwich, a planned 88-story high-end condo tower in downtown Manhattan, Shvo’s partners bought out his interest when he was indicted on tax evasion in 2016. The development group struggled to sell condos, and one of the project’s lenders stopped funding the project. Construction stalled and lender BH3 Management threatened to foreclose. Eventually, Fortress Investment Group took over the project.
Shvo, who pleaded guilty and resolved his tax issues without a jail sentence, may have been the only original partner to make money in the deal.
Now, Shvo is the one dealing with BH3, which this time holds the mezzanine portion of the loan on the iconic Raleigh Miami Beach redevelopment project.
The drama has been high for months as the project sits in limbo. Last month, the Wall Street Journal published an article with the headline: “A Luxury Real-Estate Builder’s Improbable Comeback Is Starting to Crumble.”
Can Shvo manage to stay in this deal and pull off another comeback?
Shvo has been in arbitration proceedings with one of his German investors, with Shvo seeking $85 million in fees he alleges he’s owed. A source familiar with the matter said the arbitration proceedings have been resolved. If he secured the $85 million, he could use that cash to help fund his equity position in the Raleigh.
As Shvo plots a way to hold onto the stalled luxury condo and hotel development, a rival bidder, Nahla Capital, is working on its plans in the event it takes over the property.
Shvo and his partners, Deutsche Finance America and a consortium of German pension funds paid $243 million for the 3-acre property at 1775, 1757 and 1751 Collins Avenues in 2019 with plans for the Rosewood-branded project. The assemblage includes the Richmond and South Seas hotels. In 2023, the partners secured a $190 million refinancing originated by BH3, a Fort Lauderdale-based lender, investment and development firm led by Dan Lebensohn and Greg Freedman. BH3 has extended the maturity date for the loan, most recently with an extension that expires in October, but could be extended again. Shvo is current on the loan, according to a source.
JVP Management is the senior lender, the Promote reported.
Here’s what could happen next:
Nahla Capital’s bid
The Raleigh’s ownership hired Newmark earlier this year to market the property to potential bidders. Newmark’s Adam Spies and Marcella Fasulo are representing the ownership.
New York-based Nahla Capital won the bid to purchase the project for about $275 million, as first reported by Business Insider in July. Shvo had the right of first refusal and is trying to match the offer, though a source said his right of first refusal expired.
Nahla is a private equity firm with $2 billion in assets under management, led by Genghis Hadi. The firm has experience in the same arena as the Raleigh project: It recently completed The Rosewood Residences Beverly Hills.
Nahla would take over construction of the Raleigh project, which has not gone vertical, though site work has been completed.
Nahla is moving toward signing a contract, sources said. The company is reportedly working to assemble a team in Miami Beach, if Shvo loses the property. Nahla would likely keep the current plans for a Rosewood-branded condo and hotel in place. (Shvo hired Peter Marino and Kobi Karp Architecture & Interior Design to design the Raleigh.)
Nahla did not respond to requests for comment.
Shvo’s plan
The Shvo-led partnership has gutted the original buildings, which include the historic Art Deco Raleigh, South Seas and Richmond hotels, and planned a new 17-story luxury condo tower on the beachfront site. But vertical construction has stalled.
To hold onto control of the Raleigh, Shvo would have to raise new money to pay off his partners, and likely secure new debt, Business Insider reported. Shvo did not respond to requests for comment.
Shvo has missed the peak of the cycle in what’s one of the hottest markets in the country. The developer tapped Oren and Tal Alexander’s now-defunct brokerage, Official, to lead sales of the project in 2023. The following year, the brothers were accused of drugging and raping women. Official lost its new development business. The brothers, who deny the allegations, are in jail awaiting their sex trafficking trial in January.
Official’s invitation-only strategy focused on Rosewood VIPs and friends of Marino and Shvo. All buyers had to be interviewed and approved by Shvo. The strategy backfired, industry insiders said.
Last summer, Anna Sherrill of One Sotheby’s International Realty took over presales.
Presales at the Raleigh have continued to lag behind its competitors. The Raleigh’s closest competition is Witkoff and Monroe Capital’s Auberge Resorts-branded Shore Club luxury condo and hotel project, at 1901 Collins Avenue in Miami Beach. It’s nearly fully presold, sources said. A penthouse at the Shore Club is reportedly under contract to sell for over $120 million, or more than $11,000 per square foot.
Shvo has contracts signed for nine of the 44 luxury condos planned at The Raleigh, according to a source. The Wall Street Journal reported the highest known price for a unit in contract is nearly $8,500 per square foot or more than $50 million, but most presales are in the $5,000-plus per square foot range.
Meanwhile, Shvo has parted with one of his other properties in Miami Beach.
Last week, he sold his Alton Road assemblage, where he planned a luxury office and apartment project, to Infinity Collective. Sources told TRD the property was being marketed for sale with a whisper price equal to the amount of the $28.3 million loan.
Shvo still owns a portion of the development for his One Soundscape Park office project at 1665 and 1667 Washington Avenue in Miami Beach.
Keith Larsen contributed to this story.
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