A doctor who hired JLL to help him develop a 14-story apartment building in D.C. is suing the commercial real estate giant over financial projections he claims were manipulated and caused him to lose millions of dollars on the deal.

Rishi Bhatnagar filed the lawsuit last week in Cook County, Illinois, where JLL is headquartered. The suit involves the 115-unit Pinnacle apartment building that Bhatnagar delivered in 2024 at 7 New York Ave. NE in the NoMa neighborhood.

Bhatnagar, a Laurel, Maryland-based orthopedic surgeon who founded Precision Ortohpedics & Sports Medicine, had invested in multifamily deals before but isn't a specialist in the sector. The lawsuit says he "engaged and relied upon JLL precisely because he did not possess JLL's claimed expertise in that field."

The developer sold the building in April for $30.5M to July Residential. Now, Bhatnagar says in the lawsuit that he lost more than $7.4M on the deal.

He is seeking $12.4M in damages from JLL, combining those losses with fees, interest and $4.3M in lost opportunity damages — the potential gain he could have received for investing his money elsewhere. The lawsuit asserts JLL is liable for breach of contract, fraud, fraudulent inducement, negligent misrepresentation and breach of fiduciary duty.

JLL didn't respond to Bisnow's requests for comment.

The lawsuit, filed by Jordan Shea and Alexander Loftus of Chicago-based Loftus & Eisenberg Ltd., says JLL inflated its projected income for the project "to make an unfinanceable transaction appear financeable."

The suit details a series of financial projections JLL made for the project starting in March 2021.

That month, JLL told Bhatnagar in writing that the development had a projected stabilized net operating income of $1.65M, according to the suit. In that same document, JLL allegedly said construction lenders would require a minimum debt yield — the NOI divided by the total loan amount — of 8.5%. The initial projection wouldn't reach that level.

JLL then revised its projection in December 2021 to $1.94M despite "no material change in the property," the suit says. But that still didn't reach the 8.5% debt yield level.

The suit says JLL then revised its projected NOI again in January 2022 to $2.04M, and then to $2.07M in the underwriting model it supplied to the lender's appraiser. That final NOI level cleared the required debt yield and pegged the project's future stabilized value at $51M.

In revising the projections, JLL shifted several assumptions to increase NOI, according to the suit: inflated rents, below-market payroll, understated vacancy and a lack of rent concessions.

"Each assumption, standing alone, might be defended as aggressive," the complaint alleges. "Every assumption breaking in the same direction — in successive versions, each timed to clear a known financing threshold — is not the product of honest professional judgment. It is the signature of a model built backward from the required result."

The project's lender, Hingham Institution for Savings, hired Cushman & Wakefield to conduct an appraisal, which projected its stabilized NOI at $1.85M, according to the suit. The developer claims he had received an appraisal from Riley & Associates in December 2020 when he was preparing to acquire the site, prior to retaining JLL, that projected its stabilized NOI at $1.4M.

But the developer trusted JLL's expertise and proceeded to invest more than $13.3M in the project, the lawsuit says. Ultimately, the real financial performance "fell far short" of JLL's projections, according to the suit. The $30.5M sale price was more than $20M below JLL's projected stabilized value.

Hingham provided Bhatnagar a $23.7M loan in May 2022 to finance construction, according to records filed in the D.C. Recorder of Deeds.

The lawsuit says the developer had tried in June to engage JLL in arbitration, the dispute resolution path outlined in their April 2021 project management agreement. But it says JLL declined to go that route, arguing that the developer's claims didn't fall under that agreement.

The project came online around the same time as a series of large multifamily buildings in the NoMa-Union Market area, D.C.'s fastest-growing submarket over the last several years. Many buildings struggled to achieve projected rents, and at least two developers lost new buildings to foreclosure.

Market conditions in the neighborhood have remained in tenants' favor: The Pinnacle building's website today advertises up to two months of free rent.