The Coral Gables headquarters for Location Ventures could end up in the hands of Stephen Bittel, CEO of Terranova Corporation.
An entity managed by Terranova CFO Scott Fitzgerald, which owns a delinquent loan secured by the office building at 299 Alhambra Circle, is negotiating a settlement with the court-appointed receiver managing Location Ventures to acquire the property through a pending foreclosure case, according to a motion filed on Monday.
However, the legal team for Location Ventures ex-CEO Rishi Kapoor warned the receiver, Miami-based attorney Bernice Lee, that Kapoor would object to the settlement agreement if Terranova does not release him as personal guarantor for the alleged defaulted mortgage debt, which is now $13.8 million including interest and fees, the motion states.
Kapoor’s attorney Fred Schwartz did not respond to an email requesting comment. Lee and a Terranova spokesperson each declined to comment.
Last month, U.S. Chief District Judge Cecilia Altonaga appointed Lee to oversee and manage Location Ventures, its subsidiary Urbin and various affiliates at the behest of the U.S. Securities and Exchange Commission. The SEC is suing Kapoor and Location Ventures for allegedly defrauding more than 50 investors who placed $93 million into the embattled developer’s real estate projects.
Coral Gables-based Terranova’s interest in acquiring Location Ventures’ office building is the latest twist in the sordid downfall of Kapoor and the development firm he founded in 2016.
In October, Terranova acquired the delinquent mortgage from a previous lender that filed a foreclosure complaint in Miami-Dade Circuit Court against the Location Ventures affiliate that owns 299 Alhambra Circle, records show.
Lee and Terranova negotiated a settlement agreement that includes the receiver agreeing to a final judgment in the foreclosure case. In exchange, Terranova will pay $100,000 to the Location Ventures affiliate and will agree to apply roughly $300,000 in rent that is being held in escrow to the mortgage debt, the motion states. The receiver would also consolidate offices on three floors of the five-story office building so that the spaces can be leased to new tenants. The motion was submitted by Lee in the SEC’s case in Miami federal court.
“The proposed settlement is well within the range of reasonableness,” Lee wrote in her motion. “The payoff indicates that the lender is owed in excess of $13.8 million, and that by the end of March the debt will exceed $14.1 million.”
Kapoor’s legal team informed Lee that Kapoor would object to the settlement because he believes the receiver could extract a higher sale price from Terranova, which co-owns an adjacent property at 255 Alhambra Circle. Last year, Terranova, Torose Equities and Lndmrk Development paid $54.4 million for the 13-story office building next door to 299 Alhambra Circle.
In her motion, Lee claims that Kapoor’s legal counsel advised her that the “the price of $13.8 million [that is owed] plus $100k is a significant bargain to these particular buyers.”
“However, Terranova bought the note from [Location Ventures’] lender and are trying to acquire this property’s title because they own 255 Alhambra next door, and they want to pursue an assembly for redevelopment,” Kapoor’s legal counsel allegedly told Lee, according to her motion. “Thus, the property is even more valuable to Terranova, and we believe a better deal can be negotiated using that knowledge. Therefore, we believe you can strike a better bargain.”
Kapoor will not object to the settlement agreement if Terranova agrees to fully release him from having to pay “any deficiencies as guarantor of the note,” the motion states. Judge Altonaga gave Kapoor and his lawyers until March 4 to file a response to Lee’s motion.
Lee believes the settlement agreement is the best option after an unnamed buyer backed out of purchasing 299 Alhambra Circle for $14.5 million last month, the motion states. The property was originally listed for sale with an asking price of $22 million last summer, but was reduced to $15.9 million, the motion states.
The listing was handled by CBRE, which received more than a dozen other offers ranging from $10 million to $13 million. And CBRE advised the receiver that the property’s value is less than $14 million, the motion states.
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