$15M Foreclosure Filed Over Little Havana Apartment Building

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(Apartments.com, iStock/Illustration by Steven Dilakian for The Real Deal)

The developer of the Columbus on Fifth apartment building in Miami’s Little Havana neighborhood has been hit with a $14.7 million foreclosure lawsuit, the second such case in three years involving the property.

Columbus Apartments, affiliated with Miami-based Suncoast Construction Group, is accused of defaulting on a loan it took to build the 72-unit Columbus on Fifth apartments at 514 Southwest 22nd Avenue.

COF Investment sued Columbus Apartments in Miami-Dade Circuit Court last month, alleging it had $9.7 million in principal at stake; $61,730 in accrued interest; and $4.9 million in late-arrears interest beginning in late 2021 at an annual rate of 24.5 percent on all delinquent amounts, the complaint said.

Columbus originally received a $9.3 million construction loan from Ocean Bank in 2017 to build the eight-story apartment building. It was completed in 2019 on 0.6 hectares.

COF Investment bought the loan from Ocean Bank in December and filed for foreclosure shortly thereafter.

Mortgage foreclosure filings have become more frequent over the past year, but have been mostly focused on hospitality properties, many of which have yet to make a strong comeback after 2020’s lockdown and in light of the new Omicron variant. In contrast, the multifamily housing market in South Florida has thrived due to high demand, which has pushed rents up.

The mortgage foreclosure follows a lien foreclosure case that resulted in Columbus Apartments losing title to the property, but is being fought on appeal.

In that case, Miami-based construction company MJM Structural sued in Miami-Dade Circuit Court in 2019, claiming it was owed $18,900 for work on Columbus on Fifth. MJM is suing Suncoast Construction, Columbus Apartments and other related companies that previously owned the property.

A July auction in this case resulted in the sale of the Columbus on Fifth to the Lake Worth Development Trust for $502,000, court filings show. In October, Judge Beatrice Butchko ordered a title deed in favor of Lake Worth Development.

As the new owner, Lake Worth Development is also named as a defendant in COF Investment’s mortgage foreclosure lawsuit. COF claims it has an interest in the apartment building replacing Lake Worth Development’s.

Still, ownership is a matter of dispute as Columbus Apartments is appealing Butchko’s orders.

Justin Kaplan, an attorney for Columbus Apartments, acknowledged that the company defaulted on the loan because after losing title to the property, “it didn’t make sense” to keep paying.

Lake Worth Development has a “potential problem,” both given the attractiveness of its property and because it has been sued by COF Investment, Kaplan said. Lake Worth Development would likely have to borrow to pay off the defaulted mortgage, but it will be difficult, he said.

“Very few, if any, lenders would lend against a property that a borrower might not properly own. As this foreclosure action and appeal makes its way through the courts, default interest is increasing by more than $6,500 a day. The longer this goes on, the greater the likelihood that any equity in the property will expire,” Kaplan said.

It’s unclear who runs Lake Worth Development because it’s not on state company records, though its address is linked to a Delray Beach apartment complex owned by Dallas-based Crow Holdings.

Lake Worth Development’s attorney Cory Carano declined to disclose the company’s principals, saying the trust has been “diligent in its efforts” to pay off the mortgage. But when COF Investment bought the loan from Ocean Bank, problems arose.

Lake Worth Development “was and remains ready, willing and able to assume or settle the loan, but since the loan was assigned to COF Investment a dispute has arisen as to the correct amount of interest due on the loan,” said Carano in an email statement.

COF Investment’s ownership is also unclear, Carano said, as it has yet to be determined “if it is in any way connected to the previous owner, Columbus Apartments.”

COF Investment is not registered in government company records.

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