Scrapping over SoLe Mia

Jun.June 21, 2018 10:00 AM

Biscayne Landing became SoLe Mia (rendering pictured) in 2015, when the LeFrak and Soffer families partnered on the deal.

The long and troubled saga of the North Miami site where the $4 billion megaproject SoLe Mia is being developed has a new twist.

In a suit filed in April, two companies led by developer Jeff Berkowitz claim that the project’s development group, Oleta Partners, as well as the site’s former lead developer, Michael Swerdlow, never paid for Berkowitz’s work to attract retailers to the project between 2011 and 2014.  The project’s current developers, Richard LeFrak and Jackie and Jeffrey Soffer, are now behind Oleta Partners with Swerdlow, but they were not named in this suit.

Berkowitz Realty Group and Berkowitz Development Group further allege in a civil lawsuit that Swerdlow and Oleta Partners embarked on a “secret plan” that would allow Swerdlow to sell out his stake in the company and oust Berkowitz from its role in the project. Berkowitz claims it was not even aware that Swerdlow had sold his stake in the company until reading about it in news reports.

LeFrak and the Soffers are currently constructing the ambitious mixed-use project, now known as SoLe Mia, slated to bring 12 residential buildings totaling 4,390 units with more than 1 million square feet of commercial space to North Miami.

The recent lawsuit only adds another chapter to the strange and tumultuous history of the 184-acre site, which was once home to a notorious toxic waste dump. For nearly two decades, developers have proposed grandiose megaprojects on the site at 15045 Biscayne Boulevard only to end up with losses, lawsuits and disappointment.

Once upon a time, Biscayne Landing…

Michael Swerdlow, a well-established developer whose past projects included the Dolphin Mall in Miami and Las Olas Riverfront in Fort Lauderdale, sold the rights to 15045 Biscayne Boulevard to Boca Developers in 2006, after four years of ownership.

But a handful of years later, Swerdlow had a change of heart, seeing a unique opportunity at the North Miami site. He was able to bid for the property when Boca Developers went out of business in 2010 after the financial crisis. Swerdlow envisioned a mixed-use project at one of the largest undeveloped parcels of land east of Biscayne Boulevard.

To attract large national retailers to the project, Swerdlow sought out Berkowitz Development Group, according to the lawsuit. Led by founder Jeff Berkowitz, known for his innovations in vertical retail shopping centers, the company developed such projects as Dadeland Station in Miami and the Fifth & Alton shopping center in South Beach. After an initial meeting between the two developers in early 2011, Swerdlow and Berkowitz Development Group entered into an oral agreement to form a joint venture to develop the retail component of the project known as the Retail Center, the lawsuit said.

The partnership would let Swerdlow focus on developing the project, while Berkowitz could focus on signing retail tenants.

Under the agreement, one of Berkowitz’s subsidiaries, Berkowitz Realty Group, would be the exclusive leasing broker for the Retail Center. Then, once the project was approved, Swerdlow and Berkowitz would split profits and losses of the Retail Center evenly, according to the complaint.

On May 27, 2011, Swerdlow formed an entity called Oleta Partners to formally bid on the property — ultimately winning the right to negotiate a master lease with the city of North Miami in October 2011. In the joint-venture agreement with Berkowitz, Oleta arranged a fee schedule for Berkowitz Realty Group on the leases it brought in.

While the project still needed approval from North Miami, Berkowitz soon began pursuing new retail tenants for the project, which at the time was called Biscayne Landing. At that point, the site was still under the city’s control thanks to the EPA deeming it a Superfund site in 1982.

The city of North Miami finally executed a lease agreement with Oleta Partners on May 2012. Soon afterward, Oleta Partners and Swerdlow instructed the Berkowitz Group to gain letters of intent for lease agreements.

Between September 2012 and January 2013, Berkowitz alleges it did just that. It solicited letters of intent from Michaels Stores, Ross Dress for Less, Dick’s Sporting Goods, Regal Cinemas, Burlington Coat Factory and Aldi for leases on the project.

In addition, Berkowitz said it negotiated and planned the relocation of Costco Wholesale Corp. into the development project. Berkowitz said that its work with Costco later led the company to enter into a ground sublease for a 170,000-square -foot store at the rebranded project in August 2017.

While all seemed to going well for the Retail Center, things started to change for Berkowitz on April 22, 2014.

On that date, Berkowitz alleges Oleta Partners, through Michael Tillman — the director of Florida development and acquisitions at LeFrak — told the two Berkowitz companies that “all further work on the development, marketing and leasing of the retail center should cease.”

A rendering of Biscayne Landing

The cessation was required, according to Berkowitz, because Oleta Partners needed to “recapitalize and was reconsidering the role of the retail center.” Berkowitz said that Oleta Partners was supposed to reach out to the group once “these issues were resolved.” But Oleta Partners never got back in touch with Berkowitz, who alleges it instead “embarked upon a secret plan.”

As part of this plan, Berkowitz claims that Swerdlow covertly sold his own interests in the entire project to unnamed insiders at Oleta Partners.

These insiders, who were now in control of Oleta Partners, then entered into “secret relationship” with a third-party developer and broker to serve as the joint developer and exclusive leasing broker for the retail center, thereby ousting Berkowitz Development Group and Berkowitz Realty Group from the project, according to the lawsuit.

Berkowitz did not learn that insiders had purchased Swerdlow’s interests until March 2015. This is also when Berkowitz claimed it learned that the project had been rebranded.

The lawsuit didn’t specifically name the third-party developer and broker whom Oleta had engaged for the project. Around this time, however, media reports emerged saying that Swerdlow had sold his stake in the project to LeFrak, who later brought on Turnberry Associates’ Jeffrey and Jackie Soffer. The new partnership also rebranded the project SoLe Mia, a combination of the Soffer and LeFrak names and the first three letters of Miami.

The litigation ahead

In September of 2015, the Berkowitz companies said it made a written demand that Oleta Partners provide them with reasonable compensation for their efforts, but the development group did not respond.

Now, Berkowitz is alleging breach of joint venture and breach of covenant and good faith dealings, among other claims.

  The case is still pending. Berkowitz’s lawyers filed a notice of intent to file a subpoena on June 5. Oleta Partner’s lawyer, Bruce Weil from the Miami office of Boies Schiller Flexner, filed an objection to the plaintiff’s intent to file the subpoena on June 15, claiming the subpoena is overbroad, irrelevant and harassing.

Berkowitz lawyers Jay Shapiro and Matthew Graham of Stearns Weaver Miller Weissler Alhadeff & Sitterson’s Miami offices did not  return multiple requests seeking comment.

Swerdlow did not respond to multiple calls for comment left at his office. The Soffers, through a spokesperson, also declined comment, citing pending litigation.

A representative with the LeFrak Organization said, “This complaint is utterly without merit and we are vigorously contesting it.”

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