With the 2014 success of Brickell House, a luxury condo tower named after its Miami neighborhood, and the recent announcement of Niido, an Airbnb apartment concept, real estate developer Harvey Hernandez appears to be doing well for himself.
Scratch below the surface and you’ll discover a business history which leaves one question: how much longer can this continue?
The debt can be confidently traced to the beginning of Brickell House, but based on the project’s rocky start and Hernandez’s ongoing behavior, more than likely goes further back. Newgard Development Group, headed by Harvey Hernandez, required a $15.8 million mortgage loan to begin construction. Within a year JBG Development LLC, the company who provided the loan, was suing Hernandez after an attempt to escape repayment.
Stakeholders were shocked that Newgard would attempt to flee a $15.8 million loan after making more than $157 million from unit sales. The troubles continued as Newgard, without explanation, paid off one debt by taking on another. Los Angeles-based Canyon Capital Realty Advisors provided a $27.7 million mortgage on the property, $17 million of which paid off the suit and legal fees.
Aside from obvious reconsiderations of Hernandez’s business skills, those involved now questioned the use of Brickell House’s $157 million in sales and the additional $10 million from the additional mortgage.
After the collapse of key features on the Brickell House property, a lawsuit from his residents and (after purchasing a unit of his own) neighbors, Harvey Hernandez would put his condo up for sale in 2017.
The Real Deal, a South Florida real estate publication, reported that Hernandez would be selling his condo to “buy a waterfront property in Miami Beach where he can have his boats.” Hernandez’s condo was listed in January 2017 at $7 million with a Tesla Model X for anyone who pays list price.
After several price drops, the condo was sold in August 2017 for $5.3 million. The Tesla was taken out of the agreement since it did not sell at list price.
Less than a month after initially listing his condo, Hernandez spoke on a real estate panel in which he discussed how Fort Lauderdale and surrounding real estate markets “still has legs” and how “there’s a lot of opportunity on the condo side.”
A luxurious condo in a high demand area should have no problem selling in a strong market. So why would Hernandez be so quick to close his listing at a 23% discount from the asking price? A look at tax records show there may be more at stake than the location of his boats.
A dig into the Miami-Dade IRS database show a growing number of tax liens. You can view the latest lien here.
A tax lien is a means for the IRS to collect delinquent income taxes using the law. Failing to pay the lien allows the government to seize property equivalent to the amount owed.
For Harvey Hernandez, this comes to over $5 million in liens which have accumulated since late 2012.
It’s assumed that Hernandez has since payed the lien to save his property from seizure. But with a troubled past comes reasonable concerns for future deals. What other debt is hiding behind the scenes? Will more liens be filed for recent tax years? There’s no guarantee, but the recent $36 million mortgage on Gale Residences Fort Lauderdale Beach suggests you can’t change bad habits.
SOURCE: Citizens for a Transparent Miami
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