CLAYTON — Attorneys said Wednesday that they have resolved a dispute between a Clayton firm and a member of the Busch family, over control of a real estate trust.
The case involved a Clayton-based private equity group that buys up Walmart-adjacent properties in strip malls.
In a lawsuit filed last month, the firm’s partners — CEO Joe McClary and President Jordan Breck — said they established a real estate investment trust, or REIT, with Robert Hermann Jr., grandson of August “Gussie” Busch Jr.
They said Hermann’s nephew — the chief operating officer of the Hermann Companies — told them that the trust would help them attract outside investors, and Hermann himself would also provide a significant investment.
They called the trust the “Flyover REIT.” In the spring of 2022 they began buying properties.
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The following month, they needed funding to buy a portfolio of 27 properties. Hermann Capital Management lent $5 million to McClary and $5 million to Breck — who used the loans to buy shares of Flyover — and $10 million to Flyover itself.
McClary and Breck claimed that, in the months that followed, they made every interest payment and kept their loans “current to the penny.” But earlier this year, in February, Hermann sent them notices claiming they were in default.
Hermann didn’t accuse them of any late payments, the lawsuit said. Rather, he claimed they failed to provide all of the continuous financial reporting required under the loan agreements. McClary and Breck denied that.
Last month Hermann went one step further and told McClary and Breck that he planned to sell some of the collateral included in the loan agreements — including their interest in their private equity firm.
McClary and Breck sued, and within a few days, Judge Bruce Hilton granted a temporary restraining order stalling the sale.
In a response filed in the case, Hermann said McClary and Breck had “continually failed to provide the financial reporting required” in their loan agreements, and that delaying a sale would reduce the value of the assets.
Moreover, his attorney wrote in court filings, “If lenders are precluded from foreclosing on property which secures their defaulted loans, lenders may simply stop lending altogether.”
An attorney representing Hermann did not immediately respond to requests for comment.
On Wednesday at the St. Louis County courthouse, Hilton was scheduled to consider going one step further and granting a preliminary injunction. Instead, the attorneys announced that they had reached a settlement.
Paul Puricelli, an attorney with Stone, Leyton & Gershman who represented McClary and Breck, said after the hearing that control of the trust will, for now, remain as it was before the lawsuit.
The real estate trust is managed by a board of directors consisting of McClary, Breck and a Hermann appointee.
“We’re hoping to move forward,” Puricelli said.
View life in St. Louis through the Post-Dispatch photographers’ lenses. Edited by Jenna Jones.