Left at the closing table: $101M deal dissolves into lawsuits
Wilson Capital planned to sell two apartment buildings to a New York investor, but both allege a slew of defaults tanked deal
A closing is a bit like a wedding — after a long courtship and months of planning, the two parties finally make things official. Both are also vulnerable to a runaway bride.
In October, Austin developer Wilson Capital planned to sell two apartment complexes north of Austin to a New York-based investor for $101 million. But when Wilson’s representatives went to the closing on Oct. 16, the supposed buyer, River Rock Capital, never showed. Wilson terminated the contract the next day, but the battle had only just begun.
The two firms are suing each other through multiple LLCs in New York and Texas, alleging a slew of defaults tanked their deal.
River Rock’s lawsuits tell a different story.
The firm claims Wilson failed to provide leasing and construction updates at the two developments: Brio, at 705 East Olympic Drive in Pflugerville, and the Sommery, at 5540 Sofia Place in Round Rock. Monthly rent rolls and status updates on certificates of occupancy at Brio, a new development, are among the information River Rock says it was denied. Those alleged breaches relieved River Rock of its own obligations under the contract, its lawsuits claim, and entitle it to a refund of its $2.5 million escrow deposit.
River Rock also claims Wilson set the closing date unilaterally. The purchase agreement stipulated that the deal would close “on or about 45 days after” Wilson received certificates of occupancy for the residential buildings at Brio. The date of the attempted closing was exactly 45 days after Wilson allegedly sent the certificates to River Rock, but they were not sent to River Rock’s lawyer, according to River Rock’s lawsuit.
Wilson has moved to dismiss River Rock’s suits, which were filed in New York, for lack of jurisdiction, as Wilson is based in Texas. A judge has asked River Rock to respond to that motion by Friday.
Taylor Wilson, the founder and president of Wilson Capital, said his firm denies River Rock’s claims and believes the New York suits were filed “for the sole purpose of obfuscation and delay.”
River Rock and its attorney did not respond to a request for comment.
Wilson alleges in its suits that it never breached the agreement and remains ready to meet its obligations. It is asking the court for its own $2.5 million escrow deposit back, plus damages.
Elsewhere in Austin, Wilson is building Wilson Tower. The downtown apartment building was initially slated to climb 80 stories, which would have made it 30 feet taller than Houston’s JP Morgan Chase Tower, currently the tallest in the state. The building took a haircut in the planning process though, and is now projected to be 45 stories tall.
River Rock invests in apartments in Texas and New Jersey, with a management and ownership portfolio of around 5,500 units, according to its website.
Pflugerville and Round Rock are two of the busiest areas for population growth and new development in the country, as technology giants such as Tesla and Samsung have invested heavily in the region.