Investors Sue Igor Gabal, JLL Over Distressed Loop Office Deal

Igor Gabl’s deal to buy a struggling Chicago Loop office building at an eye-popping discount left some fellow investors feeling burnt.

Gabal’s alleged cutout of fellow investors who eyed the property has sparked a lawsuit against him and brokerage JLL, and also appears to have disrupted the latest comeback of John E. Thomas, a twice-convicted real estate player who’s been through several rise-and-fall cycles, public records show.

Investor Chris Hansen and entities known as Carnegie Realty Partners and Atlas Irrevocable Trust claim in a lawsuit filed in Cook County court that they were lined up to buy the landmark 300 West Adams Street at auction in partnership with Gabal. But they were then pushed out of the deal and Gabal bought it alone at just $17 per square foot for a total of $4 million, the suit said.

The sale has made the 12-story, 240,000-square-foot property that was 50 percent leased at the time of Gabal’s purchase early this year a symbol of depressed office pricing in Chicago’s post-pandemic market.

The brokerage for the transaction, JLL, is named in the lawsuit as well but it does not name individual brokers. The brokers who were on the listing at the time of the sale were JLL’s Bruce Miller, Jaime Fink, Pat Shields and Sam DiFrancesca.

Gabal, Hansen and Atlas all agreed to buy 300 West Adams together through an LLC known as Carnegie Realty Partners, according to the lawsuit, which has been making its way through Cook County court since January. Atlas and Gabal each had a 45 percent ownership stake in Carnegie and Hansen had a 10 percent stake.

At the time of the 300 West Adams auction in June 2023, Gabal allegedly told Hansen and Atlas that he would be able to secure $7.5 million in financing to buy the building when it went to auction. Although he placed a winning bid in that amount on behalf of Carnegie, he nor anyone with Carnegie put down the required 10 percent of the price as a deposit to close the deal, the lawsuit alleges.

Gabal later secured a separate loan and bought the property individually for $4 million, without the knowledge of Hansen and Atlas. The investors now allege they are owed 55 percent ownership of the building and $4 million or more in damages.

Well-known real estate player Thomas is a manager of Carnegie and is mentioned in the legal documents, but isn’t listed as a plaintiff in the lawsuit. The Atlas trust is a trust he set up for his son. The three plaintiffs are Carnegie Real Estate Partners, Atlas Irrevocable Trust and Hansen. According to the filing, Thomas, along with Hansen and Gabal, toured 300 West Adams before making plans to buy the building together via Carnegie. Like Hansen, Thomas didn’t know Gabal had a separate plan to buy the property individually, the lawsuit states.

Thomas has led a tumultuous career involving two criminal convictions and a stint as a mole for the FBI during the investigation of Chicago political fixer Tony Rezko in the 2000s. Although Thomas a couple years ago boasted about building a $150 million real estate empire after his 2017 release from prison, he filed for bankruptcy in late 2022, though has since exited bankruptcy, public records show.

The Hansen, Carnegie and Atlas lawsuit also names JLL as a defendant, alleging the brokerage should have notified them that Gabal was planning to buy the property by himself after the original sale didn’t go through.

Both JLL and Gabal have filed motions to dismiss the lawsuit. JLL alleges that by brokering the deal with Gabal, the firm was acting in the best interest of its client, the seller, after the original deal with Carnegie collapsed.

Gabal alleges that Carnegie was formed for the trio to make real estate investments in general, and it did not specify that they would buy 300 West Adams together. Although Hansen and Atlas allege that the three agreed verbally to buy 300 West Adams via Carnegie, Gabal claims that breaking an alleged verbal agreement does not constitute a breach of contract or fiduciary duties as stated in the original filing.

A judge is set to issue a written ruling in the case in September.

An attorney for JLL declined to comment. Gabal, Hansen and Atlas’ attorneys did not respond to requests for comment.

Legal drama surrounding the building highlights the intricacies of buying at the bottom of the market. In 2012, Bryn-Mawr, Pennsylvania-based Alliance HP paid $51 million for the property. The company separated the building and the land into two entities. Although the firm was forced to surrender the building to its lender via deed in lieu of foreclosure in 2021, it maintained its ownership of the land. An entity of Morgan Stanley took over the building before selling it to Gabal.

Now, Gabal’s venture as building owner is subject to the terms of the 99-year ground lease. The lease started at $1 million a year in 2012 and increases by 3 percent each year until 2042, after which it plateaus to $2.5 million for the remainder of the lease.

In 2019, just before the pandemic decimated the office sector, Alliance was shopping the building for sale and reported to be eyeing offers in the range of $30 million, demonstrating the market crash since then as the property ultimately fetched less than one-seventh that amount with Gabal’s of the failed auction.