Rishi Kapoor is facing a hostile takeover bid.
A minority group of investors wants to oust the Coral Gables-based developer as manager for his Urbin Coconut Grove mixed-use project, according to a recently filed lawsuit.
Three entities managed separately by Clifford Losh in Coconut Grove, Enrique and Eduardo Muller in Coral Springs, and Tilia Real Estate, a Miami-based investment firm, sued Kapoor and his company Urbin in Miami-Dade Circuit Court.
The minority investors are seeking a court order that would remove Kapoor as manager of the project’s development entity, Urbin Coconut Grove Partners, the Dec. 19 complaint states.
Kenneth Florio, Kapoor’s attorney, said the minority investors are attempting to pressure his client into resolving their disputes with a meritless lawsuit.
“These select minority investors, for a variety of reasons on their side, wanted out of the partnership,” Florio said via email. “We have and will continue to work towards an amicable resolution with them, while proceeding with the successful development of Urbin Coconut Grove and its impending groundbreaking in the next month.”
Darrin Gursky, the lawyer for the minority partners, did not respond to email and voice messages seeking comment.
In 2018, Kapoor, CEO of development firm Location Ventures, teamed up with Coconut Grove-based Terra and Brickell-based Banyan Street Capital to buy a four-story office building with an open courtyard at 3138 Commodore Plaza. The partnership paid $7.2 million, and an Urbin Coconut Grove affiliate signed a 99-year lease for the building, built in 1986, records show.
Kapoor plans to redevelop 3138 Commodore Plaza into a co-working center with a food and retail market under his Urbin brand. Part of the renovation entails enclosing the atrium with a glass structure that would add between 10,000 square feet to 20,000 square feet of new air-conditioned space.
Under the Urbin banner, Kapoor also purchased a majority of the 48 units in an adjacent condominium at 3162 Commodore Plaza that he plans to convert into co-living suites. He is also developing Urbin-branded projects in Coral Gables and Miami Beach.
The Commodore Plaza office building and condominium are in an Opportunity Zone, areas deemed as lagging economically and in need of an investment jolt. Investors can defer capital gain taxes in exchange for putting their capital gains toward an Opportunity Zone project.
Last year, Losh invested $300,000 in exchange for a 2.5 percent stake in Urbin Coconut Grove, which is designated as a “qualified Opportunity Zone business,” according to an operating agreement attached to the lawsuit. Tilia placed $600,000 for a 5 percent share, and the Mullers kicked in $1.1 million for a 9.1 percent stake. Urbin owns 35 percent of the development entity. The remaining 48 percent is owned by other investors who are not parties to the lawsuit.
Losh, the Mullers and Tilia allege that Kapoor violated Urbin Coconut Grove’s operating agreement. They allege it requires that all major decisions, such as borrowing money and generating loans, must be approved by at least 70 percent of the development entity’s shareholders.
In June, during a conference call, the four minority investors objected to the construction financing plan Kapoor presented to them, the lawsuit alleges. They also brought up his alleged failure to provide them with financials for the first quarter of last year.
A week later, Location Ventures Chief Investor Relations Officer Margo Cook emailed them the first quarter financials with a message that stated, “had pay downs for the loan to avoid foreclosure to buy extensions,” the lawsuit states. The email is attached to the complaint.
The minority investors found the email “alarming” and “sought an immediate explanation,” the lawsuit states. Kapoor informed them that Urbin Coconut Grove and its affiliates paid $262,000 in fees to a lender in order to extend the maturity date on a $4 million loan. The Urbin entities also took out another $16 million loan in May of last year. The loan and modification documents are attached to the lawsuit.
Losh, the Mullers and Tilia allege that Kapoor was required to seek investor approval for the loan extensions and the $16 million mortgage, the lawsuit states. Kapoor disputed their assertions, and he told them that he planned to keep making unilateral decisions, including seeking a construction loan in excess of $70 million, the minority investors allege.