A suburban Chicago lender is threatening to take a former Stanford University trustee’s keys to a River North lodging property run by the financially troubled short-term rental company Sonder.
A foreclosure lawsuit filed in Cook County court this week claims that the owner of the building at 613 North Wells Street — which is an affiliate of Ross Walker’s Beverly Hills, California-based firm Hawkins Way Capital — has not paid off its $5 million loan that matured in December.
With interest, Hawkins Way owes $5.2 million to its lender, Skokie-based Barnett Capital, the complaint said.
A Hawkins Capital representative told The Real Deal that the firm’s failure to pay off the loan was due to “administrative reasons” over the holidays and that Barnett could expect payment as soon as Friday. Hawkins is working on securing a new loan for the property, and its deal for the debt didn’t close as soon as it initially expected.
“Our existing lender took the most aggressive position unfortunately,” Hawkins’ Lenny Ross said. Walker, the landlord’s co-founder and managing partner, served on Stanford University’s Board of Trustees after obtaining undergraduate and MBA degrees from the school.
Meanwhile, Sonder, a publicly traded company that operates hostel-like co-living and hotel properties across the globe, continues to run the building as a lodging business. Branded as the Found Hotel, the 60-room property opened its doors in 2018.
The lawsuit does not mention whether Sonder — whose stock price has fallen nearly 90 percent since going public in 2022 — played any part in Hawkins’ failure to pay off its loan. Ross as well as a lawyer for Hawkins Capital said Sonder is in good standing and current on rent, though Sonder has hit stumbling blocks in recent years.
Its most quarterly report to the SEC notes that the company is in the process of renegotiating lease terms for some of its “underperforming” properties, although it did not note which locations.
Sonder executed a reverse-stock split in the fall to prop its share price above $1 and remain listed on the NASDAQ; the NASDAQ bars companies with share prices that remain below $1 for 30 straight business days, and Sonder was warned it had neared the threshold.
Its stock was at $2.65 as of Wednesday, down from $24 when it started trading publicly two years ago. Sonder did not respond to requests for comment. Sonder laid off 14 percent of its employees and then faced delisting from the stock exchange last year, before the reverse-stock split increased its share price.
A similar hotel foreclosure dispute is playing out near Chicago’s Magnificent Mile at 100 East Chestnut Street. A lender in September filed a $25 million foreclosure complaint against landlord Michael Collier’s firm, which claims that it only defaulted on the mortgage debt because Selina, another publicly traded hospitality startup, stopped paying its rent and owes millions of dollars under its lease. Selina has denied it’s in violation of its lease.
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