South Florida developer Dezer Development wants some businesses out of its North Miami Beach mall before redevelopment, attorneys for tenants say.
The Sunny Isles Beach company reportedly wants to build there but exactly what, where on the property and when remains unclear. It has submitted no plans to the city, according to Richard Lorber, community development director.
A 2015 zoning change done with input from Dezer sheds light on what could rise there — up to 2,000 residential units, 2.5 million square feet of commercial space and buildings up to 40 stories tall on the east side of the site and scaling down to up to three stories on the west, Lorber said.
The Intracoastal Mall sits on 26.2 acres north of the Northeast 163rd Street causeway connecting North Miami Beach and Sunny Isles Beach. Dezer Intracoastal Mall LLC, an affiliate of Dezer Development, bought the property in December 2013 for $63.5 million, records show.
Since then, it has sought to evict at least six tenants for alleged nonpayment, according to Miami-Dade Circuit Court complaints. Attorneys for some of the tenants claim Dezer wants them out so it can move ahead with its project.
The Downs Law Group attorney Jeremy Friedman, who represents former tenant North Miami Beach PB LLC, said redevelopment is one of the reasons why Dezer didn’t renew this tenant’s lease.
The Planet Beach spa has sued Dezer for failing to renew its lease as allowed in the lease signed with the previous landlord, court records show. Instead, Dezer wanted the tenant to sign a modified lease that would have allowed Dezer to force the tenant out with notice, according to the December 2016 complaint.
Gary Phillips, managing partner for Phillips, Cantor, Shalek & Pfister in Hollywood and the attorney for tenant Sea Grill restaurant, said Dezer’s lawsuit against his client was ”so they could build their condominium without having to either relocate or work with the tenant or buy out the tenant’s lease.”
Dezer sued to evict the Sea Grill in March 2016, claiming the restaurant owed $128,194. Dezer upped that amount to $600,000 over time, Phillips said.
Dezer Development general counsel David Reimer denied there’s a connection between landlord-tenant issues and a future project.
The lawsuits “have nothing to do with the redevelopment of the property,” he said. “They are simply landlord-tenant cases. There are plenty of tenants we have no problem with. … Allegations that this is related to the redevelopment of the mall are not true.”
Most recently, Dezer sued to evict OBK Center Corp. saying the tenant failed to pay more than $668,000, according to the Jan. 10 complaint.
The issue in both cases stems from Dezer recalculating how much tenants owe in common area management fees, according to interviews with OBK Center Corp. and Phillips. Both tenants signed leases with previous landlords, and Dezer Intracoastal took over the leases after buying the mall.
Dezer went back to the first year and “said, ‘Look, here’s what you owe, and then we are going to increase it after that.’ We said, ‘No, you can’t go back and recalculate. Read the lease.’ There’s an addendum to the lease and says notwithstanding the actuals, this is the only amount we need to pay,” Phillips said.
Judge Jorge Cueto sided with Sea Grill, concluding the restaurant overpaid $2,110, according to a Dec. 26 final judgment.
“Landlord utilized an improperly calculated increase in the operating expenses to assert a claim for rent owed,” the judge wrote.
Alex Rosenthal of the Rosenthal Law Group in Miami and Dezer’s attorney in some of the lawsuits, has appealed, according to court records.
OBK Center Corp., which operated the Russian restaurant Bahor, closed in part because Dezer recalculated the common area management fees and the restaurant couldn’t pay, said Irina Eliutina, who owned the eatery with her husband, Oleg Elyutin. Both are named defendants.
The recalculated common area management fees “was huge money for us, and we couldn’t pay it,” she said.
In some of the cases, the court has sided with Dezer. In September 2014, the company sued tenant Rudy’s Barbershop and Spa LLC, saying it didn’t pay monthly rent and assessments. The court ordered the tenant out.
Dezer Intracoastal sued to evict Prestige Beauty Academy International Inc. alleging it owed $126,370. The two sides settled, and the case was dismissed, court records show.
The developer, whose projects include the glitzy car elevator-equipped Porsche Design Tower, in 2014 disclosed plans to the Daily Business Review to develop the east side of the mall property with 600 residential units. The subsequent city rezoning allows for a much bigger project.