Scottsdale 9/9/2014 4:32:05 AM
News / Law

Invision Capital Management Sues American Residential Properties, Inc for Breach of Contract and Fraud

Invision Capital Management files multiple claims for damages in lawsuit against American Residential Properties, Inc. According to the lawsuit, Invision attempted several times to negotiate with ARPI, a sizeable REIT based in Arizona, but the negotiations were allegedly unsuccessful, and Invision claims it was forced to sue for damages including breach of contract, unjust enrichment, and fraud along with several others. 

The complaints against ARPI detail how the company committed to a combined portfolio of $40 million to acquire and rehab properties through Invision Capital Management and began with a first injection of 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 alleges that it remediated the properties and began leasing with revenues going to ARPI in what is commonly referred to as a triple net lease. 

This was successful venture for a certain period of time until ARPI allegedly decided to stop funding the acquisitions and the rehab costs. As a result, it is alleged that ARPI eventually 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. 

To date, Invision alleges ARPI has not tried to reconcile its failure to pay the costs of rehab, which totals over $450,000 and represents just one of the multiple claims filed by Invision. This could potentially total 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.

About Invision Capital Management

Invision Capital Management is a private Phoenix-based property investment and management company that acquires and then rehabilitates affordable, entry-level housing in select U.S. markets. The Company manages a portfolio of properties that it has been growing since 2010.