A lender for Nightingale Properties is the new owner of a Miami Beach building that played a leading role in the downfall of Nightingale CEO Elie Schwartz.
But Granite Point Mortgage Trust will likely draw buyers seeking a price discount for Lincoln Place, a distressed mixed-use project at 1601 Washington Avenue, brokers say.
In a ground lease in lieu of foreclosure deal, New York-based Granite Point acquired the eight-story building with 110,000 square feet of office space and 30,000 square feet of retail space, records show. New York-based Nightingale owed Granite Point $84.7 million on a mortgage.
This month, Schwartz pleaded guilty in New York federal court to wire fraud stemming from his role in a crowdfunding scheme that defrauded roughly $62.8 million from 800 investors. He faces a maximum of 20 years in prison.
Prosecutors alleged that Schwartz diverted the funds for his own personal use. Roughly $8.8 million was supposed to be used for recapitalizing Lincoln Place, which formerly housed the Miami headquarters of LNR Partners, a special servicer of commercial mortgage-backed securities, as well as Barry Sternlicht’s Starwood Capital. Current tenants include Regions Bank, Doorloop and Teleperformance Group.
Nightingale acquired Lincoln Place’s ground lease for $80 million in 2016. The land underneath the building is owned by the city of Miami Beach.
Demand is high in the Miami-Dade County market for buildings in prime spots with large blocks of office space, said Jordan Gimelstein with Inhouse Commercial. Granite Point could possibly fetch offers close to the debt owed on the loan, but buyers will try to pay below market value, he added.
“Generally speaking, when a lender takes over a property, most buyers will try to get it at a discount,” Gimelstein said. “But overall, the office market is still very strong in Miami Beach, and there is not a lot of office space of this quality and size in that area.”
Buyers looking at distressed South Florida office properties are demanding price haircuts, said Stefano Santoro with Disruptive Real Estate. “No one is going to pay more than the debt on a building,” Santoro said. “An owner trying to sell a building for more than what’s owed to the bank is not happening.”
Indeed, Nightingale had a pending deal to sell Lincoln Place’s ground lease for $82 million last year to Robert Rivani’s Black Lion and investor Mathieu Massa. But the deal fell apart. Nightingale, Black Lion and Massa filed dueling lawsuits in Miami-Dade Circuit Court over a $2 million deposit, but the complaints were settled in September, court records show.