Aflac Files $36M Foreclosure for Greektown Offices

A pair of West Loop office buildings looks poised to head back to their lender as part of a $36 million foreclosure suit that also seeks personal judgments against landlords Andrew and James Vaccaro.

The lender is an affiliate of Aflac that in 2021 bought the debt that was originated by Chicago-based NXT Capital co-headed by Joseph Lazewski and Ted Denniston, and it wants the keys to the buildings in the Greektown area at 833 West Jackson Boulevard and 322 South Green Street, according to a a lawsuit filed in Cook County court this month. It’s also seeking the title the parking lot in between the structures at 310 South Green that was once slated for a 12-story office development.

The buildings secured a $33 million loan taken out in 2018 from NXT by affiliates of the Vaccaros, a west suburban family whose real estate assets are operated by Chicago-based Crayton Advisors, according to public records and Crayton.

John Abell, managing partner for Crayton, claimed the lender hired a new special servicer for the property and that the foreclosure was filed prematurely, while the parties are still working out a solution with the lender. He said the loan, which the suit says requires the borrowers to pay back $36 million after fees and interest, came due at a time when capital was unavailable for many landlords seeking loans but that they anticipate resolving the debt in about a week.

“Basically, our loan ended and there were no new loans in the market available,” Abell said.

Attorneys for the lender declined to comment.

The lender is also seeking personal judgments against the Vaccaros, who Aflac claims signed guarantees to pay for and cure any defaults made by the LLCs they control that own the real estate. Aflac took over a $1.1 billion portfolio of debt tied to mid-market commercial properties from NXT, starting through a partnership formed in 2018 as NXT de-emphasized real estate loans from its holdings.

Crayton operates the buildings under the V. Collective brand, which leases boutique office space to tech companies and startups, among other small businesses, according to its website. Crayton in 2015 also purchased the nearby eight-story, 174,500-square-foot building at 820 West Jackson for $18 million, as well as the 104,0000-square-foot 850 West Jackson and three adjacent parking lots for $35 million, according to previous reports.

In 2019, Abell told The Real Deal about his further plans for expansion in the West Loop area with a vision at the time to acquire the office buildings along Green Street and build more. That included a 12-story office plan for 310 South Green, where there’s currently a surface parking lot between the eight-story, 62,400-square-foot property at 833 West Jackson and the five-story, 91,100-square-foot property at 322 South Green.

The foreclosure filing is the latest in a wave of distress that has hit both major and smaller office landlords in Chicago. The filings show the rampant distress squeezing office landlords in Chicago and major cities across the country as hybrid work patterns and rising interest rates prevent big landlords from selling or refinancing at high enough values to cover their debts.

Two miles further south, there’s another neighborhood office property whose developer, Condor Partners, is in the midst of defending a foreclosure complaint by New York-based Ready Capital over a $33 million debt the developer used to convert 100-year-old industrial buildings at 1900 and 1911 South Sangamon Street into modern offices. Condor struck a big lease with Health Care Service Corp., the parent of insurer Blue Cross Blue Shield, to fully lease one of the buildings, but it didn’t generate enough momentum to lease enough of the rest of the project to make it profitable.

And even bigger offices, including downtown skyscrapers, are feeling the pinch, too. In October, lender Societe Generale filed the foreclosure complaint against the owners of 161 North Clark Street in Cook County court for $237 million. Also that month, Manulife was hit with a $151 million foreclosure from Bank of China’s Chicago branch.

Editor’s note: This story was updated to note that NXT Capital no longer controls the loan being disputed in foreclosure proceedings and that the debt was purchased by Aflac in 2021.