Shad Khan’s Stache Investments loaned the group buying the Barnett Bank building more than $3 million. But according to a legal filing Friday, it wasn’t a typical loan.
Barnett Tower LLC was never supposed to repay the money, the group said in its response to a foreclosure proceeding started by Stache in late May after claiming the group hadn’t made any payments.
Barnett Tower’s nine-page response acknowledges no payments have been made on two loans.
Instead, it outlines an arrangement between SouthEast Development Group, led by manager Stephen Atkins, and Stache at the time of the purchase.
Initially, the response said, the two sides intended for the Barnett Bank building to be purchased by Atkins’ group and then immediately sold to Desai Ventures — a business Barnett Tower says is partially funded by Stache.
Desai operated a charter school in Orlando and plans were for a school to go into the historic Downtown building, with SouthEast becoming the developer.
According to Barnett Tower’s response, the situation changed “immediately prior to the scheduled closing.”
Stache told SouthEast it didn’t want Desai to own the property or to locate a charter school there. Instead, the property was to be redeveloped and house businesses Khan had financially supported like One Spark, KYN and CoWork Jax, the response said.
Khan pulled funding from KYN in October, saying he was concerned about the small percentage that he said went to the startups. KYN immediately closed.
Vince Desai, owner of the Orlando company, said Monday afternoon he had interest in purchasing the building and trying to put a university there.
But, there would have been “a lot of costs” to refurbish and he never ended up making an offer. He didn’t get past the due diligence phase, but said he’d heard the building changed hands.
Desai also said Stache isn’t an investor in his company.
The response continued to say the Barnett deal went through and the development would help Stache recover its investment through “anticipated third-party funding.” No details about the third-party funding were included in the response.
“The parties never intended Barnett to make any payments on the loan,” according to the Barnett response.
It mentions the two companies working on predevelopment, renovation and tenant issues, even after the $3 million note was past due, and an additional 2014 loan of almost $166,000 as evidence of that relationship.
The initial foreclosure filing May 26 makes no mention of any such deal, nor does it discuss Desai.
Stache began foreclosure proceedings, claiming it’s owed more than $3.9 million as of Dec. 5. That accounts for the principal and interest for both loans.
Neither the foreclosure action nor defense mentions the Laura Street Trio, another set of historic Downtown properties, purchased by Atkins and SouthEast at the same time.
Stache spokesman Jim Woodcock wouldn’t answer questions about the foreclosure response, instead saying the company is “looking forward.”
Calls to Barnett attorney Fred Franklin of Rogers Towers went unreturned.
A court date for the case has been set for July 7.
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