The last couple of years have been rough on developer Brian Tuttle.
In December 2023, faced with a maturity date on three loans totaling $38.4 million secured by a Royal Palm Beach development site, Tuttle was on the hunt for new lenders to refinance the debt, and new equity partners that could provide capital to break ground on his 38-acre mixed-use project, Mainstreet at Tuttle.
But Tuttle got an icy reception from banks and potential investors. “Banks were saying that due to interest rates, the appraisals had to be reduced significantly,” Tuttle told The Real Deal. “And with the appraisals being reduced significantly, you had to put more equity into the deals.”
When he spoke with potential investors, “they were all looking for a steal,” Tuttle said. “So when everyone is looking for a below-market deal, the fair market deals just get overlooked. It was very frustrating.”
In July 2024, the lender, Fort Lauderdale-based Fuse Group, filed its foreclosure complaint against two Tuttle entities that own the Royal Palm Beach site. In an email to his contractors the same month, Tuttle said he had met with more than 200 groups in a 14-month span to put equity into the project, and had no luck. In September, the Tuttle entities filed for Chapter 11 bankruptcy to stave off a foreclosure auction after Fuse Group won a $47.4 million judgment during the summer.
Tuttle is not alone. A dozen other developers are going through a similar predicament. Across the tri-county region, 13 development sites have landed in bankruptcy court or are in the crosshairs of foreclosure with industry players warning that this is the front edge of a bigger wave. In 2024, five development sites faced foreclosure, according to an analysis by TRD.
South Florida’s pandemic boom was supposed to inoculate the region from the commercial real estate reckoning gripping the rest of the country. Instead, rising interest rates, high construction and land costs, and more skittish equity investors are turning stalled projects into distress cases. And a growing list of local developers are experiencing a brutal hangover, faced with a reckoning with lenders that are done “extending and pretending.”
“There’s more in the pipeline,” Josh Rubens, a shareholder with Miami law firm Kluger Kaplan, told TRD. “I think there have been some extensions over the last 12 to 24 months that you will be seeing headlines about in the next six to 12 months, as those maturities hit.”
Loans due after pandemic boom
During the Covid migration surge, developers raced to lock up sites and launch apartment towers, condo-hotels, offices and mixed-use projects on the assumption that rents and prices would keep climbing, and that floating-rate debt could be refinanced before it reset higher.
That script blew up when the Federal Reserve hiked rates, and construction costs jumped by roughly 30 percent in a matter of a few years, according to lenders. Plans that looked like slam dunks in 2021 and 2022 now show thin or negative returns once higher borrowing costs and pricier hard costs are baked in. That makes it far tougher to secure new construction loans or new bridge loans.
“Florida, and South Florida for sure, still has demand,” said Brett Forman, whose Fort Lauderdale-based Forman Capital has financed ground-up projects across the state. “But you had explosive growth brought on by Covid… and there are developers that may have gotten over their skis, perhaps [got] too aggressive.”
He points to a “ginormous amount of debt” still coming due through this year and 2026, much of it on land or early stage deals that never made it to full construction financing.
The common denominator in many of the distressed sites are short-term bridge loans — typically 12 to 36 months, sometimes with six-month or 12‑month extension options — that have already run through multiple reprieves. Those loans were supposed to carry a project through entitlements or early predevelopment to a cheaper construction loan or a sale. Instead, developers are stuck in place while interest accrues at double-digit rates.
“You rerun the math at a higher interest rate and building costs up 30 percent, and the numbers don’t make sense anymore,” Holly MacDonald‑Korth of Coral Gables-based KDM Financial, told TRD. “[Developers] have a hard time getting a new loan for a deal that, on paper, doesn’t look like it’s going to turn the profit they thought.”
That dynamic is playing out at a slew of Miami and Fort Lauderdale development sites. Forman Capital is seeking to foreclose on a planned condo-hotel site in Miami’s Arts & Entertainment District over an alleged default on an $8.3 million bridge loan that matured in August. The lender says it is owed default interest and fees on top of the unpaid principal.
The project’s former manager, prolific high-rise developer Dan Kodsi, said he is no longer involved, underscoring how quickly capital stacks can get reshuffled when a bridge lender’s clock runs out. Forman and Joseph Pardo, the attorney for the entity that owns the site, declined to comment about the foreclosure case.
Private lenders putting the squeeze
Most of the developers for the 13 sites with distressed loans are dealing with private lenders that have run out of patience. In several recent cases, foreclosure suits have escalated into bitter legal battles, with developers filing last-ditch bankruptcy petitions or appeals.
In Aventura, Rok Lending ended up taking title to a 1.6‑acre medical office development site at a foreclosure auction, paying just $477,800 after winning a $19.9 million foreclosure judgment tied to a $15 million loan it issued in 2023. Developer Marlon Gomez repeatedly tried to stall the sale with appeals and bankruptcy filings, all of which were denied. The strategy bought him time, but not a better outcome.
And on the Miami River, a receiver is trying to sell a 1.8‑acre site for a project called Miami River Cove for $18 million. The planned 40‑townhome development, also tied to Gomez, is the subject of a foreclosure suit by a Fiorentino Family Office affiliate that alleges a default on a $10 million loan and claims the borrowing entity used fraudulent documents to secure the debt. Gomez and his partners deny wrongdoing. Gomez did not respond to requests for comment.
Bankruptcy petitions and countersuits against lenders are largely stonewalling tactics by borrowers holding out hope that market conditions for refinancing and capital equity will improve, Forman said. “It’s a way of quasi delaying the inevitable,” he said.
Lenders are now pushing back on those tactics. For instance, Fuse Group, the lender in the Mainstreet at Tuttle site in Royal Palm Beach, had asked the bankruptcy court to toss the developer’s Chapter 11 petition, alleging that Tuttle long planned to use Chapter 11 solely to delay the foreclosure process. An evidentiary hearing is scheduled for Jan. 20 to Jan. 22, court records show. Rubens, the lender-side attorney, also represents Fuse Group. He declined to comment about the case.
Meanwhile, the Tuttle entities have submitted a reorganization plan to the bankruptcy court. “We filed a Chapter 11 to protect the unsecured creditors so that [Fuse Group] didn’t wipe them out,” Tuttle said. “And right now we’re working with the bank and the bankruptcy court to come up with the best plan to try and make it a win as much as possible.”
Even marquee developments that symbolized Miami’s pandemic-era swagger are starting to fray. At Miami Worldcenter, Monarch Alternative Capital is moving to foreclose on the site of Kodsi’s Legacy Hotel & Residences, a 50‑story condo-hotel where construction has been paused since last year. Monarch now controls a roughly $340 million loan originally made by Silverstein Capital Partners in late 2021, that, according to Kodsi, was only partially funded, court filings show.
Kodsi told a judge this summer that he is working on a roughly $390 million refinancing, but he missed a court ordered deadline to post a $32 million surety bond, and faced a November cutoff to pay more than $35 million in principal, unpaid interest and late fees. The case encapsulates the new math: Even highly marketed, partially built towers with strong locations and branding are struggling to refinance large, floating-rate construction loans in today’s environment.
More pain in the pipeline
Lender-side attorney Rubens said the biggest problem loans often involve default interest running at 20‑plus percent for extended periods. To refinance, borrowers may need fresh equity to bridge the gap between what the new lender will advance and what is owed on the defaulted loan.
“There may be a large balance that another lender is apprehensive about getting involved in,” Rubens said. “These things just take time, and unfortunately, time sometimes really works against the developers when you have a high interest bridge loan that’s ticking away with interest.”
MacDonald‑Korth said that with at least 13 sites already in default, more are inevitable, especially where lenders got “a little aggressive” on proceeds and valuations during the boom.
“Everybody thought South Florida is exempt from all of these commercial real estate issues,” she said. “But it turns out, a year or two later, it’s not.”
