Four years after scoring approval for a 354-unit luxury apartment tower in North Miami Beach, developer Celal Ozkan lost the site to the lender in bankruptcy court.
An affiliate of CEO Contract, led by Ozkan, will turn over the nearly 1-acre site at 16300 Northeast 19th Avenue to Miami Beach-based Safe Harbor Equity, which had provided an $8.5 million loan for the site in 2022, according to court records. CEO Contract has offices in Istanbul and New Castle, Delaware.
Federal bankruptcy court Judge Laurel M. Isicoff in Miami approved the sale last week to Safe Harbor’s distressed debt fund 3.
A source familiar with the matter said the bankruptcy auction scheduled for Sept. 26 was canceled, likely due to a lack of qualified bidders. Bidders were supposed to offer at least $4.55 million for the site, according to court filings.
This marks the end of a yearslong, bitter feud between CEO Contract and Safe Harbor.
“This is a fantastic property that we are excited to work with a developer to sell this asset,” Chris Spuches, Safe Harbor’s attorney, said, adding the firm won’t be developing the property.
Attorneys and representatives for CEO Contract didn’t return requests for comment.
CEO Contract, through its affiliate, Sky Gardens Residences, bought the vacant property in 2022 for $5.2 million. It scored final approval for the 20-story apartment tower, to be called Sky Gardens Residences, with a rooftop garden and amenities in 2021, according to records. Construction never started.
Plans took a turn beginning in 2022, when CEO Contract borrowed an $8.5 million loan with an 8.75 percent interest rate from Safe Harbor, with a one-year term and two six-month extension options, court records show. CEO Contract, its affiliates, Ozkan and Cagatay Emre Ozkan, COO of CEO Contract, were debt guarantors. Enforcement of their personal guarantees was only triggered in cases of fraud, misappropriation or diversion of the property, or other similar issues, according to CEO Contract’s court filings.
Safe Harbor alleged CEO Contract defaulted by failing to pay the August 2022 and January 2023 debt obligations by the due dates, according to court records. It also alleged that CEO Contract didn’t timely pay the full taxes for 2022. Under a forbearance agreement in 2023, the pair worked out a deal for CEO Contract to pay down the principal to $7.7 million and extend the loan term.
CEO Contract’s Sky Gardens affiliate first sued Safe Harbor last year in Miami-Dade Circuit Court, accusing it of usury and manufacturing the default claims, according to court filings. It also disputed the amount it owes in property taxes and alleged that Safe Harbor pressured CEO Contract into the forbearance agreement and imposed a 2 percent extension fee on the original loan amount of $8.5 million, not on the lower balance of $7.7 million.
At one point, Safe Harbor allegedly tried to impose a retroactive default interest rate, which coupled with other fees amounted to more than the 25 percent maximum annual rate allowed in Florida, CEO Contract alleged in court filings.
In the lawsuit, CEO Contract called Safe Harbor a “greedy lender” running a “vicious campaign” to take over the North Miami Beach site through a “‘loan-to-own’ scheme” and “impairing” the developer’s ability to refinance.
Safe Harbor responded with a countersuit for foreclosure, bringing up the default allegations and also alleging CEO Contract defaulted on the principal payment last year.
In January, CEO Contract filed for Chapter 11 bankruptcy reorganization, which paused the dueling Miami-Dade Circuit Court lawsuits. An order for foreclosure was never issued in that case.
The property is appraised at $18 million, and the proposed project at buildout and lease-up is valued at $161 million, court filings say.
The property will be transferred free and clear from liens, except for a Miami-Dade tax lien for $114,000 for 2024 and 2025 property taxes, filings show.
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