The owner of The Peach building fired back at investors who are suing him over his management of the property, denying he fabricated lease documents to obtain a mortgage.
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Samuel Lloyd is seeking to dismiss a lawsuit that accuses him and his company, Springer Equities, of falsely inflating the value of the 68-unit The Peach apartment tower, according to documents filed in Fulton County Superior Court on Feb. 5.
Lloyd's filing came in response to a lawsuit from a group of investors in the property, which claimed that he had falsified leases on some apartment units to boost The Peach’s net operating income and secure a $23.2M refinancing loan from Lument last March.
“That never happened,” Weinberg, Wheeler, Hudgins, Gunn & Dial partner William Buhay, Lloyd’s attorney, told Bisnow Monday. “But other than that, I can’t discuss it.”
Lloyd claimed that the investment group that sued him, PCH Street Investors, has no power to dictate how the property is operated and has no rights to access financial documents. He asked Fulton County Judge Jane Morrison to toss the lawsuit or issue a stay and compel the parties into arbitration.
PCH's suit “reveals a shocking level of ignorance” of the nature of its investment in the building, Buhay wrote in the filing on behalf of Lloyd.
“[PCH] is merely an investor, along with another investor, in a separate company that, in turn, has real estate holdings,” Buhay wrote. “The fact that Plaintiff seems unaware of its limited role strongly suggests that Plaintiff's management failed to conduct proper due diligence prior to investing in the company.”
PCH’s attorney, Todd Robinson, a partner at Robinson Franzman in Atlanta, didn't reply to messages seeking comment. A Lument spokesperson also didn't respond to a request for comment.
The investment group originally filed the lawsuit in December, asking the court to rule Lloyd and Springer Equities liable for fraud, breach of contract and fiduciary duty, and withholding dividends. In addition to monetary damages, it seeks to appoint a receiver to take over the operations and finances of the 12-story apartment tower.
The dispute stems from Lloyd securing a mortgage on the property last year without notifying PCH, despite the investors holding a 45% equity interest in the property at 1655 Peachtree St., the investment group said in its initial lawsuit.
Lloyd obtained the $23.2M refinancing loan from Lument to pay off a $17.5M mortgage that was set to mature in November, according to the Reonomy property database. But PCH claims it only learned about the new debt in a report by tracking firm Trepp.
The investors claim they confronted Lloyd in April, when they said the developer admitted to refinancing the property without notice and fabricating leases to increase The Peach’s income for the Lument loan. The faked leases increased the property's NOI by $1M to pump the property's value up to $35.8M, PCH claimed.
Originally constructed as an office building in the 1960s, The Peach is known for the giant peach sculpture that adorns its roof and the massive billboard facing Interstate 75/85.
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.
In 2021, Lloyd entered into a joint venture operating agreement with PCH, which ponied up $6.9M to help fund the property’s conversion, according to PCH's suit. Springer Equities invested more than $8.4M in the JV, according to the documents.
“The parties are working toward resolving it,” Buhay said. “I'm hopeful we can get it resolved short of having to go to arbitration.”
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