While most construction projects in Miami-Dade are chugging along, work came to a halt at Esplanade at Aventura during the past two months of the coronavirus pandemic. As a result, a Mexican restaurant operator wants to break its lease with landlord Seritage Growth Properties.
The publicly traded REIT is redeveloping the former Sears site at 19505 Biscayne Boulevard into Esplanade at Aventura, a 215,000-square-foot shopping plaza. While the project will be adjacent to Aventura Mall, it is not affiliated with the mall’s owners Turnberry Associates and Simon Property Group.
A rendering of Esplanade at Aventura
Carolo Holdings sued subsidiary Seritage SRC Finance LLC in Miami-Dade Circuit Court on Monday, alleging it can terminate the lease because construction is at a “standstill.” Carolo, which agreed to lease 13,114 square feet roughly a year ago, is seeking the return of a $1.7 million cash deposit the company provided Seritage while waiting for a letter of credit approval.
Craig Barnett, a Stearns Weaver Miller shareholder representing Carolo, said Seritage refused to provide a timetable for when construction would resume, and then denied Carolo’s request to tear up the lease amicably.
“Given all that is happening in the current situation, it is more important than ever for landlords and tenants to work cooperatively,” Barnett said. “Carolo Holdings attempted to do just that with this landlord. Unfortunately, the landlord refused and left no alternative.”
Matthew Fernand, Seritage’s executive vice president and general counsel, and Avi Benayoun, a Greenberg Traurig shareholder representing the REIT, did not respond to phone and email messages requesting comment.
According to the complaint, Seritage stopped construction on March 23, citing concerns for the safety of workers building Esplanade at Aventura. Carolo alleges Seritage hit the pause button out of concern for its own financial strength and the economic viability of the project in the wake of the pandemic. Seritage has refused to reconsider its suspension of construction until the end of May, the lawsuit states.
Earlier this month, Benayoun wrote letters to Barnett asserting Seritage did not breach the lease agreement and that suspending construction was a prudent move.
“We should mention that the landlord is appreciative of your partnership to this point and hopes that the parties can work together to get through this unique and unprecedented situation,” Benayoun wrote on May 7. “The landlord looks forward to moving forward with the development and having your client’s restaurant be a part of the shopping center.”
Benayoun also noted that Seritage is continuing to hold regular construction and planning meetings with its construction manager, contractors and tenant coordinator, some of whom remain on-site.
Seritage is a spinoff of Sears that acquired 180 former Sears and Kmart stores across the country and is redeveloping the former big box spaces. Between February and mid-March, the company’s stock price plummeted from the high $30s to trading below $10 a share, where it has remained. On Wednesday, Seritage’s stock price closed at $7.63 a share.
Other signed tenants at Esplanade at Aventura include co-working space firm Industrious; The Loyal by Michelin-starred chef John Fraser; Jarana, by Peruvian chef Gaston Acurio; Joey Restaurant; and Pinstripes, an entertainment concept with bowling and bocce.