In one of the first major foreclosure initiations during the cooling real estate market, a lender is suing the developers of an Edgewater hotel project for not paying a $34 million loan.
On Jan. 18, BDB Realty LLC filed the foreclosure lawsuit against Rebuild Miami-Edgewater LLC in Miami-Dade Circuit Court. Exactly one year ago, Rebuild purchased a 7.35-acre site on the corner of Northeast Second Avenue and Northeast 17th Street for $64 million from BDB, which is a partnership between Atlanta-based BDB Realty and Redwood Capital Investments. As part of the deal, the seller financed a $34 million loan carrying a 6.5 percent interest rate and maturing in two years.
State incorporation records show Rebuild is owned by developers Richard and Stephen Meruelo, who could not be reached for comment. Michael Austin, the attorney representing BDB, did not return an email and a phone message requesting comment.
The Meruelos, who own the Deauville Beach Resort in Miami Beach, were planning a mixed-use project on the site that would include a 10-story, 200-room hotel and was supposed to break ground in November 2015. The developers also said the property was zoned for up to 3 million square feet and they had planned to have a Vīb brand hotel. However, aside from hosting a 2015 Art Basel satellite fair, the site has remained vacant.
The lawsuit states that Rebuild did not repay the loan when it matured on Jan. 7 so the full $34 million is now due. The developer also ignored courtesy reminders DBD sent, the complaint alleges.
Rebuild is also being sued by architecture firm Bermello Ajamil & Partners. In a complaint filed in October of last year, Bermello alleges Rebuild has not paid $41,250 for architectural drawings commissioned by the developer. The architecture firm also filed a lien against the Edgewater property.
Prior to selling the property to Rebuild, BDB Miami had owned the site for nearly a decade and had previously planned a large retail development called Bayview Market. It received approvals for 550,000 square feet of big box retail but never started construction.