Lender’s $15 million lawsuit is latest setback for developer with ties to Mayor Suarez

One of the largest lenders behind a development company with ties to Miami Mayor Francis Suarez has sued to recover $15 million due on a loan that was used to buy two parcels in Miami Beach for a now-stalled commercial and residential project.

The lawsuit is the first filed by a lender since developer Rishi Kapoor lost control of his real estate company, Location Ventures, and stepped down as its CEO last week.

The suit accuses a local firm that borrowed the money for the URBIN mixed-use project on Washington Avenue in Miami Beach of breaching a contract and seeks to place it in foreclosure for future sale. The project at 1234-1260 Washington Ave., already saddled with liens by contractors and other vendors, was shut down in late June by city officials for lacking permits while being built along the gentrifying commercial thoroughfare in South Beach.

The complaint — filed by 1234 Washington Acquisition, LLC, headed by private lender Robert Gutlohn — says the loan deal with URBIN Miami Beach Owner, LLC, was struck in 2021 and revised the following year but that the entire principal with interest was not paid by a June 1, 2023 deadline. Total due: $15,355,312.50

Kapoor and his former Location Ventures partner, Daniel Motha, were not named as defendants in the suit, but court records show they signed side agreements personally guaranteeing the loan to Gutlohn’s lending company. Gutlohn’s lawyer, Jason Alderman, declined to comment, but he is expected to file more lawsuits on his client’s behalf in the coming weeks. Gutlohn, through other business entities, has loaned tens of millions of dollars for at least two other Location Ventures’ condominium and commercial projects in Coral Gables and Miami.

Kapoor and the lawyer for Location Ventures, Brian Goodkind, did not respond to a request for comment.

While the suit says Gutlohn’s company was not being repaid on its loan, Kapoor’s real estate firm was paying Suarez $10,000 a month as a consultant tasked with raising funds for Location Ventures’ URBIN projects in Miami, Miami Beach and Coral Gables, the Miami Herald recently reported. Since September 2021, Location Ventures had paid Suarez at least $170,000 through March 2023, according to corporate financial records reviewed by the Herald. The Herald also reported that the mayor’s office provided services that included helping Kapoor cut through red tape at Miami City Hall to obtain permits for URBIN’s $70 million Coconut Grove development, citing corporate and public records.

That formerly secret arrangement between Kapoor’s company and the Miami mayor surfaced in May when Location Ventures’ former chief financial officer, Greg Brooks, sued the firm for back pay and other compensation. Brooks, who was fired by Kapoor, noted in his lawsuit that Location Ventures was paying Suarez for “unknown services.” Suarez has yet to disclose his relationship or income from Location Ventures or its subsidiary, URBIN, in disclosure forms over the past two years. Under disclosure laws, he didn’t have to if the income was less than 5% of his outside earnings.

Suarez, a lawyer, has said that he was paid to raise money from investors.

Meanwhile, the lawsuits filed against Kapoor, Location Ventures and related entities are piling up, as the Coral Gables-based company tries to reorganize itself under the interim leadership of a former Miami-Dade Circuit judge, Alan Fine, who is assessing its assets and liabilities while considering liquidation of certain projects.

Earlier this month, two of the biggest investors in Location Ventures’ real estate projects in South Florida sued Kapoor, claiming he owes them $25 million under a contract agreement to buy out their interests that was signed at the end of last year. The lawsuit claims Kapoor failed to pay the two investors for their share of two projects in Coral Gables and Fort Lauderdale in a series of scheduled equity payments this year.

Location Ventures, Kapoor, Suarez and others have now come under the scrutiny of authorities at every level of government. Both the FBI and Securities and Exchange Commission, along with the Miami-Dade State Attorney’s Office and county ethics investigators, have opened probes of Kapoor and his business, the Miami Herald has learned. They are also looking at the consulting arrangement with Suarez, the Herald reported last month.

Work started without permits

As the developer’s financial troubles mounted, construction on the Miami Beach project commenced earlier this year — even though the city had not yet granted permits for the work.

The city ordered work to stop late last month after the Herald inquired about parts of the foundation and columns being built at the Washington Avenue site.

In a June 30 email to Miami Beach Building Official Ana Salgueiro, Location Ventures Chief Development Officer Vivian Bonet acknowledged that the project’s general contractor, Winmar Construction, had begun construction and only stopped in mid-March “once it was realized that the permit was not imminent within a couple of weeks.”

Bonet asked Salgueiro for a three-week extension to submit required documents to the city, saying the developer was unable to cover the cost of Miami-Dade County impact fees — payments to offset the cost of police, fire and other services — and could not obtain a bond “due to all of the negative press surrounding the project.”

Salgueiro granted the extension but Location Ventures failed to meet a July 24 deadline, city spokesperson Melissa Berthier said.

Berthier said the city has now filed license complaints related to the unpermitted construction against Winmar and the project’s private inspector, MTCI. The city reported Winmar Construction to Florida’s Department of Business and Professional Regulation and MTCI to the state engineering board.

After applying for a building permit in May 2021, Kapoor’s firm struggled to reach consensus with city planning staff on various issues to get it approved, public records show. As the process dragged on, Kapoor and his Miami Beach lobbyist, Michael Larkin, expressed increasing eagerness to start building.

“I really want them to be able to start construction as soon as possible and it seems that their permit is just being held up in miserable permitting limbo,” Larkin said in an email to city officials last August.

This past February, Larkin continued to display a sense of urgency as planning staff raised concerns about the amount of amenity space proposed for the co-living project, an affordable-housing concept in which residents have individual bedrooms but share common areas.

“My development team is under the gun to get this permit issued,” he wrote to city officials.

The project was slated to include 69 units, including studios as small as 275 square feet and two- to four-bedroom units larger than 1,300 square feet. In November, Location Ventures held a groundbreaking ceremony and announced all of the units had been sold at prices ranging from $400,000 to $2.4 million.

In addition to the living areas, the six-story design featured a wellness center and ground-floor food and drink offerings, all touted by Kapoor as a way to “infuse living, working and wellness into a singular location.”

The project’s implosion now complicates the city’s efforts to revitalize Washington Avenue and deliver on a concept that required zoning changes and months of selling elected officials on the idea.

Ricky Arriola, a city commissioner who supported the project, said he fears there could now be “significant delays.” Location Ventures recently appointed Fine, the former judge, to oversee liquidation of company assets.

“I hope that the receivership process goes quickly and that this project ends up in the hands of a competent developer who can finish it so that it doesn’t lay dormant,” Arriola said. “Nothing worse than an unfinished project.”

Kapoor had other potential projects in the works in Miami Beach. In May, the City Commission approved an ordinance to allow a possible future co-living project further north on Washington Avenue, near 15th Street. And Location Ventures submitted an unsolicited bid last year to redevelop a city-owned parking lot at 13th Street and Collins Avenue into a parking garage, office and retail building.

In March, an entity connected to the firm contributed $50,000 to a political group supporting Michael Gongora, a candidate for Miami Beach mayor. Arriola, a political opponent of Gongora, said he saw the contribution as a “red flag.”

“One could surmise that [Kapoor] was trying to buy political influence,” he said.