Investors Andrew and James Vaccaro aren’t walking away from their property without a fight.
The brothers, who have ties to suburban Chicago, are contesting a lender’s right to foreclose on a $33 million debt tied to office buildings in the city’s Greektown neighborhood.
The move contrasts with how some other Chicago office borrowers, hit with foreclosure lawsuits amid the market downturn, handled their cases. A few blocks away, at 216 West Jackson Boulevard, Chicago-based Marc Realty never even bothered to show up to any court hearings to prevent its loss of that vintage Loop office property to its lender last year.
Others have simply handed the keys to their lenders through deeds-in-lieu of foreclosure, allowing creditors to skip the court process while seizing overleveraged commercial real estate.
But the Vaccaro ventures that own the properties, at 833 West Jackson and 322 South Green Street, have taken positions similar to big-time office landlords. For example, 601W Companies has for years battled a lender’s complicated foreclosure lawsuit of the riverfront Civic Opera Building on Wacker Drive that began amid the pandemic.
In the case of the Vaccaro properties, an affiliate of Aflac that in 2018 bought a $1 billion package of commercial real estate debt originated by Chicago-based NXT Capital, moved to foreclose on the five-story, 91,000-square-foot 322 South Green and the eight-story, 62,400-square-foot 833 West Jackson.
There were also once plans to develop a 12-story office at 310 South Green, which is a surface parking lot between the two office buildings. Aflac aims to seize the lot, too, alleging the borrowers defaulted on its debt when it matured last year and owe $36 million.
Yet the Vaccaros are telling the judge not so fast. In court motions filed ahead of a hearing scheduled in April, they’ve denied that Aflac has the right to foreclose on the properties.
Lawyers for both the Vaccaros and Aflac declined to comment.
The borrowers partnered with a firm called Crayton Advisors to operate 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.
The Vaccaros have asked the court to rule against the Aflac affiliate and asserted several affirmative defenses, with the plaintiff’s “lack of capacity to sue” among them. They also claimed the Aflac affiliate is at a “lack of standing” because the suit was brought by the plaintiff in its own name, and not through a trustee.
Aflac has asked the court to dismiss those defenses, claiming that the defendants “waived their ability to assert defenses pursuant to the loan agreement” that has been amended four times as the borrowers tried to resolve the debt before the lawsuit was filed.
The court has appointed a receiver to operate the property while the legal process advances.
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