Monarch Alternative Capital has initiated court proceedings for a foreclosure of the unfinished Legacy Hotel & Residences, a 50-story hotel and condominium tower located in the Miami Worldcenter megaproject. This action comes just a month after Monarch became the senior lender for the project.
The developer, Royal Palm Cos. (RPC), responded with a countersuit on Monday, alleging that Monarch’s foreclosure efforts are predatory. RPC claims that the original construction loan, which was provided by an affiliate of Silverstein Properties, ceased funding last year, contributing to the stalled construction.
The Legacy Hotel & Residences project, situated at 903 NE First Ave. in Downtown Miami, was initially financed by a $340 million construction loan from Silverstein Capital Partners, which was secured by RPC, led by Dan Kodsi, in December 2021. This financing was intended for the development of 308 condo units and 218 hotel rooms, a construction endeavor that commenced in August 2021.
However, construction faced significant interruptions in March 2024, attributed to plumbing and electrical issues. Kodsi indicated that these problems were expected to be resolved soon, allowing work to resume.
In an interview, Kodsi stated that Silverstein had to halt further funding due to capital pressures from other projects, which consequently led to construction delays.
He emphasized that despite the loan being closed, the abrupt communication from Silverstein regarding the discontinuation of funding caused significant disruptions to the Legacy project.
Contrarily, Monarch claims that RPC defaulted on the loan terms from as early as January, citing missed payments and unpaid fees. Furthermore, the firm stated that the construction stalling constitutes a clear breach of the loan agreement, and RPC had also failed to pay property taxes for both 2023 and 2024, as per records from Vizzda.
The lengthy lawsuit filed by Monarch’s affiliate, Legacy Lender Holdings LLC, names multiple defendants, including Legacy MWC Trustee LLC, Kodsi, Royal Palm Cos., and over 30 related entities.
In its counterclaim, RPC asserts that Monarch’s pursuit of foreclosure is retaliatory, stemming from a previous contentious relationship over a failed joint venture related to the Coco Beach development in Puerto Rico.
Kodsi accused Monarch of engaging in misconduct in that earlier project, which he alleged included fraudulent misrepresentation and civil conspiracy. However, these claims have not been independently verified.
Kodsi characterized Monarch’s actions as a deliberate attempt to destabilize RPC in order to gain control over the Legacy project after the previous misconduct allegations came to light.
He expressed that this is more than a simple lender-borrower conflict, calling it a tactical maneuver by Monarch, who allegedly aimed to strip RPC of its equity in another project.
Moreover, RPC claims that Silverstein cooperated with Monarch in the covert transfer of the loan, without proper notification, and that Monarch is currently withholding nearly $3 million of RPC’s capital tied to the project.
This situation is not Monarch’s first encounter with accusations of predatory practices.
Silverset Properties has not provided a comment regarding the situation, nor has Monarch responded to inquiries regarding the foreclosure actions.
The legal battle surrounding the Legacy Hotel & Residences illustrates the complexities and challenges facing developers in the current financial climate, especially when dealing with distressed assets and opportunistic financiers.
As the court proceedings unfold, it remains to be seen how this conflict will impact the future of the Legacy project and the broader Miami real estate market.
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