Crescent Heights is suing CitizenM to force an ownership transfer of commercial units at a recently opened Miami Beach hotel.
In a lawsuit filed in Miami federal court, an affiliate of Miami-based Crescent Heights, led by Russell Galbut, Sonny Kahn and Bruce Menin, alleges the CitizenM entity that owns the 160-key hotel at 1628-1634 Alton Road is refusing to transfer ownership of the ground floor and second level commercial spaces, as required by a seven-year-old agreement.
In 2018, Voorschoten, Netherlands-based CitizenM, led by CEO Lennert de Jong, entered into an agreement to buy a portion of Crescent Heights’ 1212 Lincoln Road. The 12-story mixed-use project was completed last year, including the hotel. In 2020, CitizenM paid $9 million to Crescent Heights for its portion.
The non-hotel component of 1212 Lincoln Road consists of 59,000 square feet of retail, 17,000 square feet of outdoor space and roughly 400 parking spaces. Tenants include Anatomy fitness club, Rooftop Cinema Club, Sunlife Organics yogurt shop and Peter Alexander hair salon.
Representatives for Crescent Heights and Citizen M did not respond to requests for comment.
The agreement required CitizenM to transfer ownership of the commercial units upon substantial completion of the hotel, which opened in August, the lawsuit states. Crescent Heights wants a court order forcing CitizenM to honor the agreement.
Nearly a year after its completion, CitizenM still hasn’t turned over the units, possibly jeopardizing leases with two tenants that have signed on for 10 years and 15 years, respectively, Crescent Heights alleges. The lawsuit doesn’t identify the tenants, but Crescent Heights claims the leases represent roughly $5.8 million and $12.3 million, respectively, in rent payments during the life of the leases.
“In order to meet its obligations owed to its [tenants], plaintiff must proceed with
permitted construction,” the lawsuit states. “However, due to the defendant’s failure to convey title, the defendant remains the record owner of the units and must therefore sign the building permit application or otherwise authorize the permitting process, which the defendant has refused to do so.”
