The Peach Owner Sued For Allegedly Faking Leases To Land Mortgage
Samuel Lloyd, the developer who converted the iconic The Peach building in Midtown Atlanta into apartments, is being sued by his partners in the project for allegedly faking leases and fraudulently inflating income statements to secure a mortgage.
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PCH Street Investors, an investment vehicle and equity partner in The Peach, filed suit last month in Fulton County Superior Court against Lloyd and his company, Springer Equities.
PCH is asking the court to find Lloyd and his firm liable for breach of contract and fiduciary duty, withholding dividends and fraud. In addition to monetary damages, it is seeking to appoint a receiver to take over the operations and finances of the property.
At the heart of the suit is a refinancing loan Lloyd secured last year against the 68-unit The Peach apartment tower at 1655 Peachtree St., overlooking Interstate 75/85 at the edge of Midtown and Buckhead. PCH claims Lloyd executed that mortgage without its knowledge, despite holding a 45% equity interest in the property.
PCH claims that Lloyd withheld distributions from the property and created false leases to pump up the property’s net operating income on its application to the lender, according to the lawsuit filed Dec. 28.
“[Lloyd's] misrepresentations were made knowingly, intentionally, and with the intent to deceive PCH in order to conceal the refinance transaction, prevent PCH from claiming its rightful share of profits, and misappropriate funds for his own benefit,” the investors’ attorney, Todd Robinson of Robinson Franzman LLP, wrote in the lawsuit.
Robinson declined to comment on the suit. William Buhay, a partner with law firm Weinberg, Wheeler, Hudgins, Gunn & Dial, is representing Lloyd and Springer Equities and said he plans to file a formal response to the lawsuit next week.
“My clients unequivocally deny any allegations of wrongdoing,” Buhay told Bisnow via email. “It is our sincere hope that the parties can reach an amicable resolution to this business dispute.”
Originally constructed as a 12-story office building in the 1960s, The Peach is known for the giant peach sculpture that adorns the roof of the building as well as the massive billboard facing the interstate.
It sat vacant for decades before it was acquired in 2016 for $8.5M by Peachtree Hospitality of Georgia LLC, an entity controlled by Lloyd. Two years later, Lloyd tapped Smith Dalia Architects for a proposed conversion of The Peach into apartments, Rough Draft Atlanta previously reported.
In 2021, Lloyd entered into a joint venture operating agreement through the PCH entity with 450 investors who ponied up $6.9M to help fund the property’s conversion, according to documents filed in the lawsuit. Springer Equities invested more than $8.4M in the JV, according to documents.
Lloyd refinanced the previous $17.5M loan on the property, which was set to mature in November, without alerting the equity partners, according to the lawsuit. According to records, Lument originated a more than $23M mortgage to refinance the previous loan, which reset the maturity date to March 2029.
PCH claims the property wasn't generating enough income to justify the loan amount. According to the suit, the new loan valued the property at $35.8M, which would require The Peach to have been generating more than $2.2M in net operating income, $1M more than Lloyd told investors the apartment complex was producing.
In April, the investors in PCH confronted Lloyd about the refinancing after discovering information about it on the CMBS tracking firm Trepp’s website, according to the suit. During that meeting, the investors allege Lloyd admitted to refinancing the property without any notice and fabricating leases to increase The Peach’s income for the Lument loan. He then refused to provide bank statements or loan documents to substantiate that there was a $3.7M surplus, according to the lawsuit.
“The March 2024 refinance, executed without PCH’s knowledge or consent, is evidence of Defendants’ self-dealing and deliberate concealment of material financial transactions,” the lawsuit says. “[Lloyd] admitted to fabricating leases to inflate the Property’s NOI, exposing the Company and its Members to legal risks, including potential claims of loan fraud.”