Block 37 developer settles dispute with lenders

The lender on the massive Biscayne Landing commercial project being built on a landfill in North Miami has sued the project principals, claiming default on nearly $190 million.

Cerberus Capital Management, operating as Madeleine LLC, filed the lawsuit earlier this month in New York for nonpayment of its mezzanine loans and ground lease money it owes to North Miami.

Cerberus has taken over the first phase of the Biscayne Landing project, which involves thousands of residential units, as well as offices and retail development.

Brian Street and James Cohen, the developers behind Biscayne Landing, operate under the name Boca Developers, which still controls the bulk of the Biscayne Landing site.

Bruce Gibson, a CB Richard Ellis commercial broker opposed to Boca Developers’ involvement because of its financial problems, said the city should immediately remove the developer from the project.

“I don’t think they should have any part of the project,” he said. “I don’t think the city should deal with them in the future. They are not a credible developer.”

Calls to North Miami Mayor Kevin Burns, Street and Cohen’s spokesperson and their attorney, Lorin Mrachek of West Palm Beach, were not returned.

The complaint, which seeks $189.7 million, says Madeleine provided a $275 million mezzanine loan to Street and Cohen in July 2006 for nine development projects in South Florida, including Biscayne Landing.

The suit alleges property owners of the projects defaulted on obligations to senior lenders, accelerating loan obligations, and that Street and Cohen defaulted on the mezzanine loan. Madeleine said it moved against collateral securing the loan, including the acquisition of an equity interest in BLIA Developers, the company that launched the first phase of Biscayne Landing.

The complaint says the city of North Miami notified Madeleine on Sept. 2 that Street and Cohen did not pay certain ground lease rent obligations to the tune of $1.27 million.

The suit also alleges BLIA Developers improperly transferred $500,000 from interest on escrowed unit deposits to Paradigm Design & Construction.

The Daily Business Review reported Monday that Street and Cohen have countersued Cerberus, claiming they are not in arrears.

South Florida Business Journal previously reported the problems at Biscayne Landing. The project has been delayed and was overhauled because the developer misjudged the viability of residential condo development and has been in negotiations with lenders to return its projects, some of which were never completed.

The principals of Boca Developers also have a company that is the preferred developer of the city’s affordable housing program.

Original Story - South Florida Business Journal