HIG seizes Gold Coast multifamily as ex-owners double down in court fight

Cacciatore venture disputes sale, accuses partner Strategic Properties of North America of fraud, self-dealing and mismanagement of $50M debt

HIG Takes Chicago Condo Tower in Foreclosure Amid Lawsuits
Cacciatore Real Estate's Joey Cacciatore and HIG Capital's Sami Mnaymneh with 21 East Chestnut Street in Chicago (Google Maps, HIG Capital, LinkedIn)

HIG Capital took back the keys to a Gold Coast apartment building even as its former co-owners, members of the Cacciatore Chicago real estate family, refuse to go down without a fight.

After an HIG affiliate took over the 163-unit property at 21 East Chestnut Street via foreclosure in August, entities tied to the CEO of the firm Jos. Cacciatore & Co. Real Estate sued in an attempt to maintain an ownership stake. He alleges the foreclosure was caused entirely by their former partners in the property, Yitzy Klor and Saul Kupperwasser of Strategic Properties of North America.

The property’s former owners include Joseph Cacciatore, who heads the eponymous real estate firm, his wife Maria and a venture led by his son Joseph Jr. Entities tied to the family also sued Klor’s SPNA separately. Phil Cacciatore, CEO of Chicago-based Lakeside Bank, said he wasn’t involved in the property.

Despite the foreclosure auction taking place months ago due to the Cacciatores’ and SPNA’s default on more than $50 million in debt provided by HIG, the family’s legal fight rages on in Cook County court. They’re among many multifamily owners facing financial distress in Chicago.

The Cacciatores initially sought a temporary restraining order to prevent the foreclosure sale from taking place. But according to HIG, it ultimately agreed “not to interfere with the sale,” court records said.

When the Cacciatores sued again following the sale, asking to have some of their ownership in the property restored, HIG hit back.

“Your clients’ desperate bid to claw back their equity by asserting meritless claims against these entities is itself frivolous, but worse, is a flagrant violation of the stipulation your clients entered into in open court,” a letter from HIG attorney Thaddeus Wilson to the Cacciatores’ lawyers said.

The lender requested a judge sanction the family’s lawyers over their approach to addressing the issue. The judge denied the request for sanctions last month and scheduled an April 24 hearing to determine the next steps for the case.

Legal representatives of HIG and SPNA did not respond to requests for comment. The Cacciatores’ legal counsel declined to comment.

The Cacciatores’ partner in the building, SPNA, made a name for itself throughout the 2010s leading successful bulk condo buyouts in Chicago, including turning 21 East Chestnut from condo ownership into a rental building.

It’s far from the first time the firm led by Kupperwasser and Klor has found itself in hot water. Not only has the firm or its affiliates faced pressure from their lenders in recent months, but they’ve also been accused of botching attempts to convert other Chicago condo buildings.

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At 200 North Dearborn Street, one condo owner is suing SPNA because the firm’s buyout of the 310-unit property has been stalled for about two years.

The condo board for an even bigger Chicago building, called Ontario Place, backed out of a $190 million buyout deal with SPNA last summer after three years of failed negotiations.

In the case of 21 East Chestnut, the Cacciatores sued SPNA last year alleging the firm committed fraud, self-dealing and mismanagement of the building.

The Cacciatores’ lawsuit mainly focuses on an alleged breach of a 2020 agreement in which Klor and Kuperwasser were supposed to match the Cacciatores’ $6 million investment in the property.

Instead, SPNA executives took out a $10.2 million mezzanine loan on top of a $40.8 million loan for the property, both from HIG affiliates. The family’s lawsuit alleges that SPNA took out the mezzanine loan without informing the Cacciatores.

They assert that the SPNA executives could have avoided piling up debt had they invested their agreed upon $6 million share into the property.

SPNA executives last summer asked for an additional $1.5 million from the Cacciatores to help stabilize the property, claiming it was short on cash to cover unspecified costs, but the family didn’t comply, the lawsuit states.

The family’s venture with SPNA defaulted on the $51 million in debt, forcing the building into foreclosure. That’s when it ended up in HIG’s hands.

In the lawsuit between HIG and the Cacciatores, HIG alleges the firm seized the property through a valid foreclosure process and that any disputes between the former co-owners should not impact the transaction or the current ownership.

“HIG pointed out that while (the Cacciatores) might have claims against Klor/Kupperwasser, those claims would be for damages and did not entitle (the Cacciatores) to prevent HIG from exercising its rights with respect to the admittedly defaulted loans,” a legal filing from HIG said.

Editor’s note: This story has been updated to specify which members of the Cacciatore family invested in 21 East Chestnut.

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