Elie Schwartz‘s lender has taken over the Miami Beach office building that played a key role in his $54M crowdfunding fraud scheme.
The Lincoln Place office building in Miami Beach
The Nightingale Properties CEO signed over the Lincoln Place office building at 1601 Washington Ave. to an affiliate of Granite Point Mortgage Trust via a ground lease assignment in lieu of foreclosure, according to documents filed with the Miami-Dade County clerk.
Affiliates of Nightingale purchased the eight-story, 140K SF office building for $80M in 2016 and took out $84.7M in debt from Granite Point tied to two mortgages from 2016 and 2019. The building is subject to a ground lease on land owned by the city of Miami Beach.
The transfer of the lease to GP 1601 Owner LLC occurred on Jan. 28 and was financed with a $71.6M mortgage from another Granite Point affiliate, according to the South Florida Business Journal, which first reported the transaction.
“In lieu of foreclosure of our loans on 1601 Washington Avenue, a Granite Point subsidiary recently took title to the property and we are currently developing our plans for it,” a Granite Point representative told Bisnow in an email. “The extent of our business relationship with Nightingale Properties were the loans used to finance the property, and we have no further relationship with Mr. Schwartz or Nightingale Properties.”
Nightingale raised $8.8M on real estate crowdfunding platform CrowdStreet to recapitalize and renovate the building. It set a goal to raise $15M in the campaign, which launched in November 2022 and drew 170 accredited investors with stakes ranging between $25K and $500K.
The campaign accepted investments until March 2023, but three months later, Schwartz had embezzled virtually all of it, he admitted in federal court earlier this month. He also misappropriated $45M of the $54M he raised in a failed deal to purchase the 1M SF Atlanta Financial Center office complex.
He pleaded guilty to one count of wire fraud and faces a maximum 20-year prison sentence, with a hearing set for May 19.
He spent the money on luxury watches, art, soon-to-fail bank stocks, payroll for his other business and other pieces of his struggling portfolio, according to a Securities and Exchange Commission lawsuit. The SEC is pushing to permanently ban Schwartz from issuing or selling securities.
Nightingale at one point owned a 22M SF portfolio valued at $10B, but many of its largest holdings have been lost to lenders and former partners.
Lincoln Place, which also has a 499-space parking garage, was the building Starwood Capital chose to move to when it decamped from its headquarters in Connecticut in 2016. It moved to a new building at 2340 Collins Ave. in 2022, leaving 1601 Washington vacant.
After Schwartz’s CrowdStreet deals publicly collapsed and he was losing other pieces of his vast portfolio to foreclosure, he struck a deal to sell the building in September 2023 to Miami-based Black Lion and Massa Investment Group for $82M.
The deal fell through a few months later. Nightingale sued, claiming it was entitled to a $2M deposit. Black Lion and Massa countersued, claiming Nightingale refused to agree to an extension and accused the firm and Schwartz of violating the terms of the deal.
The two parties settled the lawsuit, which was dismissed last fall, according to court records.
