The embattled head of Tides Equities faces another lawsuit from a lender that was defrauded of money, the fourth lawsuit filed in the pair's individual names over alleged damages.
Tampa-based debt fund Electra Capital is suing Sean Kia and Ryan Andrade, claiming they triggered a lawsuit against two Texas apartment buildings: the 208-unit Tides and the 188-unit Tides at Randol West in Fort Worth. A recourse guarantee for a pair of mezzanine loans backed by. On Green Oaks in Arlington.
A recourse guarantee makes the guarantor personally liable in the event of default. Taking into account other lawsuits filed by Starwood Mortgage Capital, Acres Capital and Rialto Capital Advisors, the latest lawsuit could cost Kia $32 million and Andrade $36 million respectively loss.
Electra Capital CEO Sam Greenblatt, as well as Kia and Andrade, did not respond to requests for comment.
Recent complaints also point to a copycat effect, in which creditors, focusing on lawsuits from other lenders, rush to file lawsuits while the sponsor remains liquid.
As with much of its portfolio, the sponsors defaulted on debts totaling $8 million, and Electra foreclosed, the complaint said. In addition to mezzanine debt, the transactions also resulted in $48 million in senior loans.
When Electra took ownership and repositioned itself, it found a disaster: "Hundreds of thousands in accounts payable...mechanics liens, judgments and lawsuits...and millions more in unfinished renovations and repairs that Electra had to complete ," the lawsuit reads.
Electra claims that the terms of its loan require Kia and Andrade to address these issues, and that the pair have signed a bond promising that they will address them.
“But (the principal) failed to do so in gross breach of its contractual obligations,” the lawsuit states.
The lender's lawsuit accuses Kia and Andrade of "gross negligence, mismanagement and self-dealing," including rent misappropriation.
Electra is seeking $6 million individually from Kia and Andrade as well as attorneys' fees for alleged breach of warranty.
Following complaints from Starwood, Acres and Rialto in the past few months, observers have questioned whether the personal liabilities of Tides leaders are high enough to bankrupt them. Sponsors had no comment.
During an appearance in September the real dealAt the Los Angeles forum, Kia and Andrade were optimistic about the prospects for 2025 and said the worst was behind them.
But just a few weeks into the year, lawsuits related to personal guarantees and foreclosures are piling up.
January 10, the real deal Benefit Street Partners has reportedly reacquired the Tides of Haverwood in Dallas with a credit offer of $61 million after the sponsor defaulted on nearly $67 million in debt.
This article originally appeared in The Real Deal. Click here to read the full article.