Nightingale Agrees To Sell Miami Building Where CEO Allegedly Misappropriated Capital From CrowdStreet Investors
A pair of investors is under contract to buy a Miami Beach office building for $82M from Nightingale Properties, an embattled investor facing multiple federal investigations into how it handled crowdfunding for the property’s renovation.
Black Lion Partners and Massa Investment Group, both based in Miami, are planning to purchase the eight-story, 140K SF office building with a 499-space parking garage at 1601 Washington Ave.
Nightingale paid $80M for the property in 2016, according to property records, before launching a crowdfunding campaign on the investment platform CrowdStreet in 2022 to raise money for renovations. It raised $8.8M, but the fund-raise deal never closed, and investors, who had to commit at least $25K, never received their money back.
Miami-Dade County valued 1601 Washington at $43.9M this year, according to records.
The deal for the former headquarters of Starwood Capital, which has been mostly vacant since last year, is expected to close at the end of the year, according to a release. Black Lion and Massa are planning to invest millions into renovations to “breathe new life into the property.”
“Our vision for this space is next level,” Black Lion founder and President Robert Rivani said in a statement. “With the migration of companies and wealth from cities like Los Angeles, New York and Chicago to South Florida, there is an undeniable need for elevated, world-class office space. We plan to deliver a one-of-a-kind hospitality office and retail experience that the area has never seen before.”
The sale is being brokered by Jeremy Hakala and Clay Snider at Newmark.
The Nightingale entity that owns the building, NG 1601 Washington Ave LLC, filed for Chapter 11 bankruptcy protection in Delaware in July. CrowdStreet also put another Nightingale acquisition, the 915K SF Atlanta Financial Center, into bankruptcy after the crowdfunding platform couldn't account for more than $50M in investor capital raised for both deals.
Two weeks ago, the fiduciary appointed to steer CrowdStreet investors in both bankrupt entities, Anna Phillips, hinted that a “substantial transaction” was in the works that would be part of a larger proposed settlement with Nightingale and its CEO, Elie Schwartz. It wasn't clear if this is the transaction Phillips referenced.
Details of the settlement hadn't been presented to investors, who would need to vote on the transaction, as of press time.
The Department of Justice and Securities and Exchange Commission are continuing investigations into Nightingale’s alleged misappropriation of funds.
CrowdStreet's investigation is also ongoing, and this month it said it discovered Schwartz took more than $10M of the raised funds to invest in First Republic Bank stock and options as the bank was facing a liquidity crunch just weeks before it failed. Schwartz also used $23M in investor funds to pay dozens of third parties.
Nightingale is facing foreclosure at several properties as it looks to shed 1601 Washington Ave., including a 15-story office building in Manhattan, a 1.2M SF vacant Wall Street office and the largest office property in Philadelphia.
CrowdStreet has also faced questions about its business model amid the Nightingale fallout. It announced a series of updated due diligence standards in August that included a broker-dealer designation, a commitment to hold investor funds in escrow accounts and an enhanced review of deal sponsors and terms.
It released an updated investment thesis on Wednesday in what the firm said was a response to high interest rates. It now plans to seek deals that prioritize principal protection, sustainably service debt and “place a higher value” on current market conditions as opposed to “what may be possible down the road,” according to a release.
Black Lion and Massa are making a bet they can reposition 1601 Washington Ave. in one of Miami’s most expensive office markets.
Average asking rents in Miami Beach were at $85.60 per SF at the end of the second quarter, behind only the Wynwood-Design District and just ahead of the city’s financial industry epicenter in Brickell, according to JLL. Vacancy in the submarket is among the lowest in Miami at 13.1%, more than 3 percentage points below the city’s average.
“This property at 1601 Washington Avenue holds immense potential, and our vision is to transform it into an unparalleled, world-class office and retail destination that South Florida has long been yearning for,” Mathieu Massa, founder and CEO of Massa Investment Group, said in a statement.
