Conrad Fort Lauderdale Beach
Seven months after finally opening Conrad Fort Lauderdale Beach, its developers are back in court in a nasty fight for control of the long-delayed, financially troubled condo-hotel project.
Between February and March, JJN FLB LLC and CFLB Partnership filed dueling lawsuits against one another in Miami-Dade Circuit Court that allege contract breaches, self-dealing arrangements and the stalling of a $40.9 million sale of the property at 551 North Fort Lauderdale Beach Boulevard.
JJN FLB, an entity controlled by Pierre Heafey — president and founder of Quebec, Canada-based Heafey Group — and the Pegula family — which owns the NFL’s Buffalo Bills — became a 51 percent owner in the Conrad Fort Lauderdale Beach in December 2016, according to the entity’s Feb. 15 lawsuit.
CFLB Partnership LLC, an affiliate of Conrad FLB LLC that is managed by South Florida developers Jose and Joseph Cabanas, sold 232 units plus commercial and common space to JJN FLB and other Heafey-affiliated companies in four separate transactions totaling $100 million. The Heafey affiliates also assumed a $236.5 million mortgage from Ladder Capital Finance.
Four entities controlled by the Cabanas, including CFLB, own 49 percent of the project.
It appears both sides have soured on the deal, based on the suits. JJN alleges that CFLB has refused to execute part of the agreement that allows the Heafey-Pegula company to buy 20 percent of the condo-hotel units. The lawsuit claims CFLB initially agreed to consummate the deal after JJN raised its offer from $37.5 million to $40.9 million in October of last year, when the Conrad Fort Lauderdale Beach opened for business.
Attorneys for JJN and CFLB did not respond to phone messages and emails requesting comment.
On March 14, CFLB sued JJN, accusing Heafey-Pegula company of “profound breaches of the operating agreements and several instances of gross self-dealing.” Among them, JJN executed a sales and marketing agreement with Cervera Real Estate that provided the Heafey-Pegula partnership with an illegal 1.75 percent marketing fee calculated on the purchase price in connection with sales of certain condo-hotel units, the CFLB complaint alleges.
CFLB claims it did not authorize JJN to collect the 1.75 percent fee and that its partners made misleading statement about the Cervera agreement. JJN also awarded the Pegula family an overly lucrative agreement to operate an oceanside restaurant on the Conrad property despite strenuous objections by CFLB, the lawsuit states. CFLB wanted to bring in the owners of Yolo and Tarpon Bend and claimed the Pegulas don’t have any experience managing South Florida restaurants.
The 24-story condo hotel has 290 units including studios, suites with one to three bedrooms, and three penthouses that come equipped with galley kitchens with touch-screen stove tops, marble bath tubs and rainfall showers. Amenities include a 4,000-square-foot spa, a 20,000-square foot sky deck with a heated pool on the sixth floor and 10,000 square feet of meeting space. One night at the Conrad Fort Laurderdale Beach starts at $339.
The project has been marred by setbacks and funding issues since it was originally conceived in 2004 as the Trump International Hotel & Tower. Developer Roy Stillman’s SB Hotel Associates had obtained a licensing agreement with the Trump Organization, but litigation between buyers and SB resulted in the builder running out of money. That project ultimately failed.
The Cabanas entered the picture as part of an investment group led by hotel developer Orchestra Hotels + Resorts that bought the project in 2013 for $115 million. They had planned to spend $40 million to finish the Conrad as a 290-unit tower with 109 condos and 181 condo-hotel units. However the budget soared by at least $70 million and the completion date was pushed back several times.
from The Real Deal Miami https://therealdeal.com/miami/2018/05/02/conrad-fort-lauderdale-beach-partners-are-back-in-court-over-41m-dispute/
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