Developer of nixed Sunny Isles Beach project seeks return of $5M advance: lawsuit

Rendering of GPI Real Estate Group’s Infinity, a previously planned 15-story mixed-use project

A proposal to build Infinity, a 15-story mixed-use project on the west side of Sunny Isles Beach is dead. As a result, developer GPI Real Estate Group wants to kill a $20 million deal that has been pending since 2015 to buy the land.

The developer’s affiliate, GPI Sunny Isles LLC, is suing TNG Holdings and its owner Robert Cornfeld in Miami-Dade Circuit Court to force the repayment of a $5 million advance. The no-interest loan is tied to the purchase agreement for a parking lot at 16700 Collins Avenue where the project was to be developed, according to the suit, filed May 21.

Cornfield’s firm currently owns the 68,726-square-foot lot that GPI, led by Roy Adams, Philip Aginsky, Aron Leibowich and Michel Regignano, wanted to convert into Infinity. The project was planned to have 220 hotel rooms, 120 residential units, 22,560 square feet of retail and 700 parking spaces.

But the project’s site plan approval stalled when Sunny Isles Beach enacted a building moratorium last year. The development site is directly across the street from the Newport Beachside Hotel and Resort, which is owned and operated by Cornfeld’s firm, The Cornfeld Group.

Franklin Zimmel, the attorney for TNG and Cornfeld, declined comment because he said his client had not been served with the lawsuit.

“Everybody wanted to do the deal, but just couldn’t get the site plan approved,” said GPI’s lawyer Alan Kluger. “My client made a demand on the note and he expected it to be paid within the grace period. It hasn’t, so he had to file a lawsuit.”

According to the complaint, GPI agreed to buy the land for $20 million, contingent on getting a site plan approved for a building measuring 170 feet tall or greater. As a deposit, GPI provided a $5 million promissory note on which Cornfeld did not have to pay any interest. He would also be allowed to repay the note by applying the note to the purchase price at closing. The closing date has been changed six times over the past five years. It was most recently scheduled for March 26. The suit claims that TNG agreed that GPI could still back out of the deal before the most recent closing date.

However, GPI ran into a roadblock last year from residents and shopping center mogul and Miami Heat minority owner Raanan Katz, who opposed changes to Sunny Isles Beach’s zoning regulations that would have allowed for the development of 9,000 hotel and residential units on the west side of Collins Avenue. The zoning changes were required before GPI, which is a silent capital investor in three luxury condo projects developed by Property Markets Group, could obtain approval for its site plan.

Instead, Sunny Isles Beach passed the one-year building moratorium in September 2019.

In February, Zemmel informed GPI principals they would be in default if the March 26 closing didn’t move forward.

According to correspondence between Zemmel and another lawyer from Kluger’s firm, Cornfeld had indicated he was open to terminating the deal, and then sell the property to the city and share some of the profits with GPI. Zemmel responded that if GPI backed out of the deal, his client would not be required to pay back the $5 million note. “[TNG’s] obligation to repay the advance shall be deemed canceled,” Zemmel wrote on March 5.

On March 23, upon determining Sunny Isles Beach would not approve a project of 170 feet or taller, GPI notified Cornfeld and TNG that it was terminating the purchase agreement and demanded arrangements be made to repay the $5 million.

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from The Real Deal Miami & Miami Florida Real Estate & Housing News | & Curbed Miami - All https://therealdeal.com/miami/2020/06/03/developer-of-nixed-sunny-isles-beach-project-seeks-return-of-5m-advance-lawsuit/
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