Phoenix 9/1/2014 11:15:06 PM
News / Law

Invision Capital Management Files Multiple Claims against American Residential Properties Inc. after Several Failed Negotiations

Invision Capital Management has filed multiple claims for damages in a lawsuit against American Residential Properties, Inc stating that after many unsuccessful attempts to negotiate with ARPI, Invision Capital Management was forced to file a lawsuit to get the rehab expenses reimbursed by ARPI. Invision Capital Management is a local property investment and management company based in Phoenix, Arizona that began jointly developing a portfolio or affordable, entry-level housing in 2010. American Residential Properties is a sizeable REIT seeking to grow its portfolio of rental properties. It committed to partner with Invision Capital to jointly build a portfolio of properties in Phoenix, Indianapolis and Las Vegas markets. 

According to the complaint, ARPI had committed to a combined portfolio of $40 million to acquire and rehab properties through Invision and began with a first injection capital in 2012. By the summer of 2013, Invision acquired a total of 550 properties in the Phoenix, Indianapolis and Las Vegas markets worth an estimated $28 million. 

Invision Capital Management claims that it remediated the properties and began leasing with revenues going to ARPI in what is commonly called a triple net lease. While this was successful for a period of time, ARPI allegedly decided to stop funding the acquisitions and the rehab costs. Then, ARPI allegedly defaulted Invision and took over those portfolios based on a lack of enough tenant revenue to pay ARPI the required rent under the triple net lease arrangement. The complaint alleges that this was specifically a result of a lack of initial funding by ARPI to rehab the properties and get them stabilized in order to create enough rent for Invision to remain current on the master lease agreements. 

After multiple alleged negotiations failed to get the rehab expenses reimbursed, Invision claims they were forced to sue ARPI to get the claim as well as eight other claims including, but not limited to, unjust enrichment, breach of contract and fraud. Furthermore, Invision alleges that, to date, ARPI has not tried to reconcile its failure to pay the costs of rehab, a total of $450,000, and represents just one of the multiple claims filed by Invision. The total sum of all the claims could potentially reach more than $8,000,000. By under-funding its commitment to Invision, the suit alleges ARPI was able to squeeze them out and take over the portfolios and the corresponding profits interest of Invision in the assets. Invision alleges that ARPI has also done this with other third party partners such as Landsmith. 

Allegedly, ARPI settled its dispute with Landsmith for an undisclosed amount.