The developer behind the massive Midtown Miami project is facing a foreclosure suit from iStar FM Loans, which wants to seize about 5.5 acres alongside that site.
New York-based iStar (NYSE: SFI) also has foreclosure lawsuits pending against a handful of South Florida condo projects.
Jack Cayre, president of New York-based Midtown Equities, said he’s mind-boggled by iStar’s decision to file foreclosure instead of refinance his company’s loans for another year. Cayre said his company is current on interest payments on the loans, but they were due in full a few months ago.
At about 5 million square feet, Midtown Miami includes about 1,000 residential units and a big-box shopping center.
The properties facing foreclosure are on the east side of the Florida East Coast Railroad tracks, with Northeast Second Avenue as the eastern boundary. The warehouse sites are between Northeast 29th and Northeast 32nd streets.
Cayre said the situation with iStar has nothing to do with the Midtown Miami project, which he said is thriving under a different lender. He hopes he can sell the sites targeted by the foreclosure, or refinance the loans.
“I’d file this one under a lender probably doing something that doesn’t make a whole lot of sense,” Cayre said. “We’re pretty shocked that, being a borrower in good standing and being a small loan, they wouldn’t want to keep it a performing loan. We even offered to pay them a whole year of interest up front.”
Cayre said iStar seems more intent on getting some liquidity out of the loan as soon as possible than keeping his companies in the property while paying on time.
Those sites, envisioned as a shopping center, formerly housed the sales office for Midtown Miami, but that has since moved into the project.
Biscayne Venture Development and Casam 3110 – two companies controlled by the Midtown Miami developer – bought the sites in 2003 and took out two mortgages with Fremont Investment and Loan, which later sold most of its commercial portfolio to iStar.
In late 2006, those mortgages were increased to $6 million and $1.6 million and the document named Joseph Cayre, chairman of Midtown Equities, and Midtown Miami co-developer Michael Samuel as guarantors.
Two notices of foreclosure were filed by iStar against both companies and the guarantors on Dec. 11 in Miami-Dade County Circuit Court.
The complaints say the developers went into default when the mortgages were not repaid in full in October. They ask for damages in the full amount of the loans, plus interest and penalties, and for a receiver to be appointed over the properties.
Holland & Knight’s Jose A. Casal, the Miami attorney representing iStar, declined to comment.
Peter Zalewski, principal of Condo Vultures Realty, said the property near Midtown Miami would be best suited as a warehouse for wealthy investors with large art collections.
“There’s no need for additional retail because Midtown Miami filled that appetite,” he said.
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