Shvo to Arbitrate $85 Million Claim With Lender BVK

Developer Michael Shvo has engaged in a high-stakes arbitration dispute with Bayerische Versorgungskammer, the German pension fund that has backed many of his high-profile U.S. projects.

Shvo has filed a claim through the private Judicial Arbitration and Mediation Services, alleging he is owed more than $85 million in fees, including $27 million in payments tied to specific properties and $21 million in carried interest from the Transamerica Pyramid project in San Francisco, Bisnow reported.

BVK said in a statement it is “not unusual to seek a separation, possibly prematurely, depending on the performance of an investment, the overall market or the existing interest of third parties.”

Shvo declined to comment, according to Bisnow.

The legal clash comes amid mounting concerns in Germany over BVK’s exposure to Shvo’s ventures, which have faced delays and financial troubles. Shvo’s projects — often funded by German pensioner money — include the Raleigh Hotel in Miami, Mandarin Oriental Residences in Beverly Hills and 711 Fifth Avenue in New York. BVK has invested more than $712 million in Shvo-related deals via a fund managed by Deutsche Finance America, though the pension fund emphasizes it has no direct contractual relationship with Shvo.

The arbitration dispute was sparked in part by leadership upheaval. Rainer Komenda, BVK’s longtime real estate head, and Jason Lucas, who oversaw BVK’s U.S. investments at Deutsche Finance, have both exited their roles. The Bavarian State Parliament has questioned BVK after German tabloid Abendzeitung reported on potential pension fund losses tied to Shvo’s struggling developments. BVK has since launched an internal review.

BVK maintains that its investments are managed prudently and that any potential losses will not impact pension benefits. In 2024, BVK achieved a 3.4 percent net return, which it says exceeds its actuarial requirements.

Some of Shvo’s projects have stalled or defaulted.

In Miami, redevelopment of the historic Raleigh Hotel has dragged on for years, and the property is now subject to a $275 million bid from Nahla Capital, which Shvo can match to retain control. In Beverly Hills, he defaulted on $200 million in loans just four months after completing the Mandarin Oriental Residences, selling most of the units in bulk to Centurion Real Estate Partners.

Shvo recently achieved a legal victory in a high-profile dispute with members-only Core Club, a tenant in the Transamerica Pyramid. Earlier this week, a New York judge ordered Core Club to pay him nearly $1 million. The club took out a $750,000 loan from Shvo in 2022, but defaulted by failing to pay up when its location on Manhattan’s Fifth Avenue opened the next year.

Core is appealing the decision and continues to accuse Shvo of misconduct.

—Joel Russell