Miami Worldcenter: How a sparkling vision became a morass of debt

December 23, 2009 By: Paola Iuspa-Abbott
Miami Worldcenter

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he Miami Worldcenter, one of South Florida’s most ambitious mixed-use developments, has become the backdrop of a legal and financial soap opera, casting doubt on the future of the proposed project near downtown Miami.

New York investor Harvey Silverman, 68, and partner Marc Roberts, 50, had close to a father-and-son relationship that blossomed when the economy was growing and money was flowing.

Now the partnership is going through a break-up, highlighted by unpaid loans and accusations of fraud and broken promises.

The project continues to be plagued by foreclosures and lawsuits, and even if the joint venture resolves its problems, some observers doubt the complex will ever rise on the collection of empty lots and rundown warehouses in Miami’s Park West neighborhood.

Last month, a company led by Roberts, a former boxing promoter, lost one of the parcels that make up the site to foreclosure.

And in September, Naples-based Orion Bank, now operated by Louisiana-based IberiaBank, sued four companies led by Roberts to recover $26 million it loaned them three years ago to buy 15 parcels in Park West.

Roberts did not reply to a request for comment. Alan Rose, his West Palm Beach lawyer, declined to comment on the pending litigation.

Silverman didn’t respond to a request for comment through his lawyer Thomas Decea in New York. Decea declined to comment on the pending litigation.

LOSS OF NET WORTH

From 2005 to 2008, Silverman, who had a net worth of about $300 million in 2007, borrowed nearly $78 million so Roberts could assemble 25 acres in Park West for the site of Miami Worldcenter. The money also helped pay for Roberts’ living expenses, according numerous federal lawsuits filed in New York and South Florida.

By September 2008, Silverman had lost millions in the stock market and failed real-estate ventures. A month later, he stopped funding Miami Worldcenter as well as Roberts’ “lavish lifestyle,” according to the lawsuits.

In a number of suits and countersuits, each says the other breached contracts and should be held responsible for paying $78 million owed to several banks.

The developers say Miami Worldcenter would transform eight blocks into nearly 12 million square feet of stores, offices, hotel rooms, convention space, condos and restaurants west of the American Airlines Arena and south of the Adrienne Arsht Center for the Performing Arts. The complex would extend from Northeast Sixth to 11th streets and from North Miami to Second avenues.

In 2004, Roberts came up with the plan, and Silverman agreed to provide the financing. Roberts’ job was to manage the business, buy land and look for equity partners and investors.

Roberts soon recruited Boca Raton developer Arthur Falcone as an equity partner. Roberts and Silverman own 50 percent of the project; Falcone, CEO of the Falcone Group, owns the other 50 percent.

Once Silverman and Roberts stopped paying for their share of the project, Falcone’s company picked up the tab.

“My group has been funding the difference,” said Falcone, whose company is not involved in the legal battles between Roberts and Silverman. “I can’t get into the details of our operating agreement, but we’ve been handling it from our end.”

Falcone said he is prepared to wait for better times while the group seeks construction financing.

“The Miami Worldcenter was always more of a long-term hold,” he said on Monday. ”We have to wait until the market changes. Right now it wouldn’t be the right time [to develop it]. But we are still picking up pieces.”

In September, a group affiliated with Falcone, PWV Group 1 Holdings, closed on the purchase of 27 parcels to be part of Miami Worldcenter. The price was $39 million. Roberts and Falcone had the parcels under contract for more than a year at a price tag of $88.7 million.

The deal went through after the seller, troubled Africa-Israel, slashed its asking price by about $50 million.

The September purchase came even as the Roberts-Silverman partnership was in disarray. Roberts sued Silverman in Florida in May for allegedly breaking a 2004 oral agreement to fund the Miami Worldcenter. Silverman countersued several weeks later, claiming Roberts had “perpetrated a massive fraudulent scheme.”

He argued that Roberts extended lines of credit that were in Silverman’s name but negotiated by both partners. Silverman said he did not agree to the extension.

Roberts replied that Silverman wanted him to use some of the joint venture funds “to maintain a lifestyle commensurate with that of their other partners,” according to court filings.

Roberts was to pay Silverman back with profits from the completed project, according to the suits.

Roberts also said he never extended lines of credit without Silverman’s approval. He said Silverman signed every bank document and received financial statements that kept him up to date on the joint venture’s bank accounts and loans.

First Bank is suing Silverman and Roberts in New York to recoup $30 million on a defaulted line of credit tied to the Miami project.

Silverman recently settled with Deutsche Bank, which sued to collect $20 million of a delinquent loan, also tied to the Miami Worldcenter.

LONG ASSOCIATION

When the two met in 1988, Roberts was raising money for Triple Threat Enterprises, a company that represented professional athletes in New York. Silverman invested in the business and obtained a line of credit to pay for Roberts’ personal and business expenses, according to court documents filed by Roberts.

Silverman repaid the line of credit when Roberts took the company public and made a profit.

In 1995, the partners followed the same successful strategy when Roberts launched Worldwide Entertainment & Sports Corp.

CURRENT TROUBLES

Now, more than a decade later, things are far different.

Roberts faces battles with lenders over Miami Worldcenter. He guaranteed four loans made by Orion Bank between 2005 and 2006 to buy 16 parcels in Park West.

He defaulted on the loans totaling $26 million in April after he failed to pay the interest and property taxes, according to the lender’s lawsuits. The suits also name Falcone as a guarantor.

Roberts and Falcone are fighting the suit while waiting for the housing market to rebound. “For now, we are looking at cleaning up this situation with Orion Bank,” Falcone said.

Roberts and Falcone received another setback last month, when lender C&H Land Corp. won a foreclosure suit on a 5,000-square-foot parcel in Park West. A company led by Roberts, 717 NE 1 LLC, defaulted on a $3 million promissory note in January. A foreclosure auction is set for July.

Miami attorney Ron Isriel, who represented C&H in the suit, said Roberts and Falcone made no effort to try to save the land. Meanwhile, Park West property owners says the mostly vacant parcels are an eyesore.

“It is another failed project with disastrous consequences to the neglected Park West neighborhood,” said Park West property owner Brad Knoefler. [Cont.]

To read the full article, visit http://www.dailybusinessreview.com


Paola Iuspa-Abbott can be reached at (305) 347-6657.

Copyright © 2009, ALM Properties, Inc.

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