Property Buyer Sues Developer for ‘Misrepresented’ $70M Sale
Date Posted: December 19, 2024
Posted In: News, Projects,
From Multifamily Dive: Lakewood, New Jersey-based real estate syndicator Silverstone Management is suing the companies responsible for building and developing Bold on Blvd, a 272-unit apartment property in St. Peters, Missouri, for allegedly misrepresenting the condition of the property in a $70 million sale to Silverstone in 2022, according to court documents.
The suit, filed in the St. Louis County Circuit Court on Nov. 29, lists Silverstone and five associated LLCs — RCG Bold 1, 2, 3, 4 and 5 — as plaintiffs. The defendants include Indianapolis-based developer TWG Management, its affiliate TWG Construction and Bold St. Peters, a Clayton, Missouri-based joint venture between TWG and New York City-based private equity firm Mandrake Capital Partners.
Neither Silverstone nor Mandrake responded to a request for comment from Multifamily Dive. TWG declined to comment.
The plaintiff states in court documents that it purchased the property based on information and documentation provided by the defendants. It alleges that these materials presented Bold on Blvd as a development with strong leasing activity and site work and infrastructure in good working order, which would allow for lower operating expenses and a higher return on investment than an older property. Defendants were required to provide all rent rolls, construction drawings and vendor contracts to the plaintiff.
Before the deal was set to close, the Federal Reserve’s interest rate hikes decreased Bold on Blvd’s market value, according to the lawsuit. In order to keep the property’s value, the plaintiff alleges, Bold St. Peters leased to unqualified tenants in order to increase its income. The joint venture also seller financed $15 million of the $70 million purchase price.