Troubled Student Housing Firm Would Pay Tens of Millions to Investors

Axonic, in a statement, said it believed it would owe only $4.25 million to investors.

“We firmly believe we were collateral damage to Nelson’s fraud in this case,” the company said.

Robert Brownlie and Doug Brothers, the lawyers for the investors, said they were pleased with the ruling.

Mr. Nelson has repeatedly blamed the Covid-19 pandemic for creating cash flow problems that forced him to stop paying dividends to investors in Skyloft and other properties. Since last July, he has put three other properties into bankruptcy.

In a recent news release, Mr. Nelson said the federal government’s “heavy handed” lockdowns during the pandemic created problems for his firm.

“Even as government forbid owners from evicting nonpaying renters, it did nothing to protect businesses like Nelson Partners from their lenders,” said Mr. Nelson, whose firm received just over $1 million in aid from the federal Paycheck Protection Program.

Skyloft investors, in court papers and in interviews, claimed Mr. Nelson had diverted some of the $75 million he had raised from them to finance the operation of other properties. Mr. Nelson has denied those accusations.

Mr. Nelson began taking steps to sell off some of the properties managed by his firm before the settlement agreement. In January, Nelson Partners sold a high-rise student apartment building in Tempe, Ariz., for $36 million, and it has received several bids for an upscale student housing complex in Tucson.

Article source: https://www.nytimes.com/2022/05/12/business/nelson-partners-skyloft-student-housing.html