Everything seemed to be going so well, too.
Newgard Development Group chairman Harvey Hernandez lost projects when
the real estate market went bellyup, but Miami is full of second acts.
Hernandez emerged this year from his Chapter 7 bankruptcy shielded
from his creditors for projects that went bad in the last boom, and
toting the much buzzed-about, greenish Centro with San Fran hipster
gadget-maker Yves Béhar. BrickellHouse, which he's building where a
previous condo project fizzled, is slated to be among the first condo
towers standing in Miami's post-bust real estate market.
"We are working on the 37th floor," Hernandez said of the 46-story
$170 million Sieger Suarez tower. The project's 99 percent sold,
Hernandez told the Miami Herald, which begs the question why Newgard
would seek a construction loan. Just as things are starting to look
up, Hernadez and his partner Jesus Quintero have been slapped with a
foreclosure suit by BrickellHouse's mortgage lender, the Baboun
family's JPG Development LLC, which holds a $15.8 million lien on the
property (ie: they will be first to get paid back if the project goes
bust). The suit marks the first foreclosure action taken against a
condo this market cycle (just goes to show, first isn't always best.)
It that weren't melodramatic enough, JPG is also the site's previous
developer, forced to cancel its 1350 Biscayne Bay project and hand
back buyer deposits when the condo bubble popped. JPG says in an Oct.
4 Miami-Dade Circuit Court suit that Newgard is trying to breach its
contract with JPG by seeking a construction loan agreement that would
put JPG in a subordinate position as a creditor (ie: at risk of not
getting paid back, not even a cent.) They say BrickellHouse is using
buyers' deposits (aside from the 10 percent that goes into escrow and
therefore cannot be touched) to pay builders and a general contractor,
when the money should be going to them. Hogwash, says Robert Frankel,
Newgard's attorney, calling the suit "a classic case of sellers'
remorse." The suit hasn't stopped construction of BrickellHouse, set
to be completed in the summer of 2014, but watch out: that hint of a
breeze you feel just might be a chilling effect on Miami's
supercharged condo development market, particularly at the empty lot
where the future Centro is planned.
· Dispute between stakeholders leads to BrickellHouse foreclosure suit [Miami Herald]
· First foreclosure filed over post-recession Miami condo project [SFBJ]