By Rebecca San Juan and Andres Viglucci
The owner of the historic Security Building in Downtown Miami is facing a $46 million foreclosure after failing to pay rent.
The Denver-based investment firm Platform Capital Funding filed a foreclosure lawsuit against Security Building AR Owner LLC in the 11th Circuit Miami-Dade Judicial Court in December. It also sued Richard Weisfisch, Andrew Joblon, Arash Gohari and Daniel Gohari, guarantors who were hired to ensure Security Building AR Owner LLC paid its loan.
WeWork made a splash when it opened in downtown’s Security Building in 2017. WEWORK
Security Building AR Owner LLC has failed to pay for its office tower at 117 NE First Ave. since April. The foreclosure lawsuit includes a $37.22 million principal balance, administrative and late fees.
Platform Capital Funding’s representative, Miami-based Polsinelli lawyer Henry Bolz IV, declined to comment. Security Building AR Owner LLC’s representative, Miami-based Carlton Fields lawyer Ilan Nieuchowcz, did not respond to a request for comment.
“Office buildings like this one are having tremendous issues in enforcing the leases,” said Steven Zelkowitz, managing partner at Coral Gables-based Spiritus Law. “People are working from home. Tenants are not paying the rent. That’s the problem.”
A final judgment may take a year to 18 months, Zelkowitz said, given the backlog of delayed cases.
The building’s sole and exiting tenant is WeWork, a co-working company that’s faced financial headwinds since 2019. The company has seven locations across Miami.
WeWork opened at the Security Building in 2017 after it renovated the 92,910-square-foot building in a two-year-long process.
“WeWork did an amazing job [with the space] but they were ahead of their times,” said Mika Mattingly, Colliers International executive managing director. “The foreclosure had to do with the internal problems of WeWork, not Downtown.”
The owner will have a challenging time leasing the building due to social distancing concerns and companies allowing employees to work remotely, said Tony Arellano, Downtown Realty Advisors co-founder and managing partner. Arellano brokered the building’s last sale; Security Building AR Owner LLC dropped $23.5 million in 2015.
“It’s going to take a lot of energy and elbow grease,” Arellano said. “There is a lot of money at stake. To ride this ship in this environment is not easy.”
The history of the Security Building, one of Miami’s earliest high-rises, has closely paralleled the city’s boom-and-bust economy.
It was built during the 1920s land boom by the Dade County Security Company, a leading local home-loan company, for its headquarters. Upper stories contained offices for rent.
The lavishly detailed 16-story tower, designed by New York architect Robert Greenfield and completed in 1928, boasts a granite facade, a three-story base that recalls a Greek temple, and — unusual for Miami — a sloping copper-clad French mansard roof punctured by portholes and topped by a cupola.
The design, strong construction and the Security name were meant to underscore the safety and stability of the company and booming Miami. But the land collapse that soon followed and the subsequent Depression drove the Security Company into bankruptcy and eventual dissolution.
That led to decades of ownership and name changes starting in 1945.
In 1989, the Security Building was added to the National Register of Historic Places. The city of Miami designated it a protected historic landmark in 2003, but its prominence had faded as downtown went into a long decline.
In the early 2000s, a developer restored the building, renamed it Capital Lofts and announced a conversion to office condos, but that project failed to take off when that market tanked.
In 2015, new owners Security Building AR Owner LLC leased the entire building to WeWork amid a burgeoning downtown revival. When it opened in 2017 as the company’s downtown Miami co-working hub, WeWork said it was almost fully occupied.
Although the historic designation covers only the building’s exterior, many original interior details have been preserved by its owners. It’s been reported that WeWork uses the building’s original bank vault as a quiet room.