“King of the West Loop” could soon be facing a cash crunch

Phil Denny’s real estate investment firm Peppercorn saw its $12.5M loan at 240 N. Ashland enter special servicing

TRD CHICAGO /
Apr.April 29, 2020 12:00 PM
Phil Denny, 240 N. Ashland (Credit: Google Maps)

Phil Denny, 240 N. Ashland
(Credit: Google Maps)

Real estate investor Phil Denny has a problem. One of his anchor tenants, the photo and video production arm of Crate & Barrel, just left his 80,000-square-foot building on the outskirts of Fulton Market. And the $12.5 million loan on the three-story property at 240 N. Ashland Avenue recently transferred to a Miami-based special servicer, according to Crain’s.

Denny, whose company Peppercorn owns about 25 properties in the West Loop and the city’s Near West Side, told Crain’s that he wasn’t worried about losing the property to a default.

But if tenants at several other properties don’t pay rent in the next few months, he’ll face a serious cash crunch. “We’re preparing for a situation where the demand is so much less that it might be a challenge to carry the buildings for a prolonged period of time,” Denny, who has embraced the moniker “The King of the West Loop,” told the outlet. “That, in my opinion, warranted getting to know the special servicer and getting their opinion.”

Denny’s situation could be a preview of what’s to come for many owners of commercial property in Chicago, as the economic shutdown continues to depress rental collection rates, while mortgage payments pile up, and the prospect of finding new tenants remains slim.

Peppercorn bought the building in 2008 for $13 million and took a $12.5 million loan out in 2015, which was bundled with other loans as part of a commercial mortgage-backed security. Denny tried to sell the property in 2018 as an Opportunity Zone play, but found no takers. Crate & Barrel signed a lease in early 2018 to move to Logan Square.

LNR Partners was appointed as the special servicer to represent CMBS investors. [Crain’s]James Kleimann

 

Related Articles

arrow_forward_ios
North Park Ventures co-founder Robert Sekula and 2730-2766 Hampton Parkway in Evanston (Google Maps)

North Park Ventures does condo deconversion shuffle in Evanston

North Park Ventures does condo deconversion shuffle in Evanston
Prologis’ Hamid Moghadam and an aerial of 3501 120th Ave in Kenosha, Wisconsin (Prologis; Google Maps)

Prologis sells Amazon fulfillment center in Kenosha for record price

Prologis sells Amazon fulfillment center in Kenosha for record price
Chicago Mayor Lori Lightfoot and the former Cabrini-Green public housing complex, which the city is redeveloping with help from TIF district funding (Getty)

State approves funding for low-income housing for Near North TIF district

State approves funding for low-income housing for Near North TIF district
Mark Zuckerberg and Facebook's proposed data center in Dekalb (Mandel Ngan/AFP/Getty)

Facebook is set to build an $800M server farm outside Chicago

Facebook is set to build an $800M server farm outside Chicago
The coronavirus pandemic led to a 35% drop in new residential projects

Residential construction starts have cratered in Chicago

Residential construction starts have cratered in Chicago
Monty Python “I’m not dead yet...‘tis but a flesh wound” scene in downtown Chicago (EMI Films/Python (Monty) Pictures Limited)

Downtown landlords take a hit, but they’re not mortally wounded

Downtown landlords take a hit, but they’re not mortally wounded
No. 9 Walton and 1959 W. Schiller Street (JDL; Redfin)

Unit at JDL’s No. 9 Walton tops priciest home sales of week

Unit at JDL’s No. 9 Walton tops priciest home sales of week
Gov. J.B. Pritzker (Getty)

These landlords are suing to toss out Pritzker’s eviction ban

These landlords are suing to toss out Pritzker’s eviction ban
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...