TPG seizes Arlington Heights apartment complex from CA Ventures

Investors in a CA Ventures affiliate that developed a big apartment complex in suburban Chicago are licking their wounds, while the developer works to avoid more pain at a North Side asset.

Chicago-based CA Ventures, which built the property in partnership with a firm called Springbank, surrendered the 263-unit rental asset at 3401 West Payton Place to its lender, San Francisco-based publicly traded debt fund TPG Real Estate Finance Trust, which provided an $80 million loan on the property in 2021.

“This is the worst correction [for] real estate ever,” CA Ventures CEO Tom Scott said in an email, noting that rising interest rates have spelled trouble for borrowers. “Sales are down across the board, and everything that was built and delivered is old underwriting, so no profits from development.”

The TPG fund disclosed in SEC filings last week that it seized the Payton Place property in December, and it has accounted for an $8.5 million loss for converting it into a real estate-owned asset on its books.

The lender declined to comment. The property was one of four it snagged through foreclosure or deeds-in-lieu of foreclosure in December. The others are offices in San Mateo, California, Orange, California, and New York City.

Meanwhile, CA Ventures has turned its attention to working out plans to retain other assets, such as its 59-unit property at 1900 West Lawrence Avenue in Chicago’s Ravenswood neighborhood. That property — a redevelopment of one of the original seven Sears stores built in the 1920s — is carrying a $32 million floating rate debt that was flagged by its lender, an affiliate of LoanCore, as a concern for potential nonpayment in recent months, according to credit ratings agency Morningstar.

But the debt was removed from the lender’s watchlist in January, which is a sign the borrower might get the deal back on track. Scott said his firm is negotiating to retain that asset, though its debt service costs have likely surged as interest rate hikes took place over the last two years.

LoanCore didn’t return a request for comment.

CA Ventures’ loss of Payton Place came as Scott and his firm are defending several lawsuits brought against them by investors, creditors and former employees.

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