Chinese investor sues Medistar over alleged deal gone bad

Doctor, it’s an emergency — the deal is on its last legs!  

Chinese investor BCEGI scored a temporary injunction after suing Houston medical real estate firm Medistar over a deal gone bad on a piece of land the two own together through a joint venture. BCEGI alleges Medistar is trying to sell 7171 Grand Boulevard, a 20.4-acre development site near Texas Medical Center, without its consent. It asked a Texas court to issue a temporary restraining order blocking any sale. 

BCEGI, a subsidiary of Beijing Construction Engineering Group, joined up with Medistar in 2017 to purchase the 20.4 acres just north of Interstate 610. There is a dilapidated, 74,000-square-foot warehouse built in 1974 on the site, but it stands near several valuable neighborhoods and transit thoroughfares in Houston. 

In May, the joint venture reached a deal to sell the land to Houston homebuilder City Choice for $22.5 million, over $1.1 million per acre, according to the lawsuit. City Choice deposited $350,000, of which $100,000 was nonrefundable. The rest would become nonrefundable after an inspection on July 1, with another $250,000 coming due the next day, the suit claims. 

As the inspection date neared, City Choice emailed the seller’s broker, CBRE, asking to extend the deadline by a week and cut the price by $500,000, citing issues with the property, according to email records included in the lawsuit. BCEGI told Medistar it was considering the offer, but Medistar said it was not particularly warm to a re-trade. However, it confirmed in the email that decisions would be made as a team. 

As the end of the workday on July 1 neared, City Choice sent an email terminating the deal, according to records included with the suit. On July 9, after slowdowns in the city’s real estate market due to Independence Day and Hurricane Beryl, BCEGI emailed Select Title, which was working as the escrow agent and title company on the deal, asking it to circulate instructions on canceling the deal. 

Select, though, responded that it had received City Choice’s additional deposit and the check had been “sitting on [its] desk since July 1st.” It also said City Choice was ready to move forward with the deal, the suit alleges. 

BCEGI reminded the title company that the deal had been canceled, and again asked it to circulate cancellation instructions to the buyer and the land ownership joint venture. It also reminded Medistar that it can’t take any actions without its approval, the records show. It claimed, however, that Medistar and City Choice were trying to move forward with the deal anyway. 

While the Texas court issued an injunction on July 12 temporarily blocking the sale, the case appears to have been bumped out to a federal court. Medistar, which did not file a response in the suit, declined to comment.

BCEGI is based in Woodland Hills, California, and also has offices in Houston and Dallas. 

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