In a fresh hell for Tides Equities’ co-founders, their lender on a Dallas multifamily complex is going after them personally for the unpaid balance of a $33 million loan.
Tides already lost the property — Tides on McCallum — to foreclosure this summer.
But Long Island-based Acres Capital, which took back the asset with a $28 million credit bid, alleges the sale failed to satisfy the debt. It slapped Sean Kia and Ryan Andrade with a suit in New York Supreme Court, alleging the two principals defaulted three times on a recourse guaranty.
Under such a guaranty, the debtor is personally liable for a loan’s outstanding balance after the collateral sells — in this case, $5 million.
Kia and Andrade did not immediately respond to a request for comment. Acres is led by CEO Mark Fogel and managing partners Marty Reasoner and Andrew Fentress.
Tides Equities’ principals, whose firm has lost numerous properties to foreclosure because of rising interest rates and other issues, agreed to keep the Dallas complex free from waste and liens, and to maintain an interest rate cap to protect against rising rates.
Kia and Andrade failed on all fronts, Acres’ suit alleges. It claims they allowed bed bug, roach and termite infestations to spread and failed to repair collapsed roofs, foundation leaks and units made uninhabitable by mold. They did not buy a new interest rate cap in September to replace an expired one, the suit claims. (The cost of caps soared after the Federal Reserve raised interest rates.)
For those alleged breaches, Acres seeks $3 million in damages.
The kicker, though, are the $427,000 in mechanic’s liens Kia and Andrade allowed to fester.
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Acres alleges the liens allow it to hold the borrowers liable for the full amount owed under the loan documents — a sum to be proven at trial. On top of that, Acres wants $8.2 million in damages.
That includes $3 million for property damage and the missing rate cap, and $5.2 million for failing to complete renovations — a condition of a separate guaranty.