Javors surrenders LaSalle Street office building entangled in lawsuits

Washington D.C.-based lender seized 448 North LaSalle via deed in lieu of foreclosure after $3.7M eviction ruling against entities tied to QuadReal, CA Ventures

Lender Seizes Chicago Office Building Entangled in Lawsuits

QuadReal's Dennis Lopez, National Real Estate Advisors' Jeffrey Kanne and CA Ventures' Tom Scott with 448 North LaSalle Street (QuadReal, National Real Estate Advisors, Taylor Johnson, Lamar Johnson Collaborative, Getty)

Jun 18, 2024, 3:27 PM

A River North office building ensnared by multiple lawsuits involving local firm CA Ventures is back in the hands of its lender.

Jaime Javors, developer of the 12-story building at 448 North LaSalle Street, signed a deed-in-lieu of foreclosure May 28 rather than pay off the $70 million loan tied to the property, issued in 2019 by Washington, D.C.-based National Real Estate Advisors.

As the lender, headed by CEO Jeffrey Kanne, takes back the keys, it’s unclear if the foreclosure will affect legal battles related to the 175,000-square-foot property, much of which remains empty. Chicago-based CA Ventures announced a 70,000-square-foot lease in the building weeks before the pandemic altered its office needs and doomed the LaSalle Street development. The firm has also since been pulled into numerous lawsuits by former employees, investors and lenders.

Canadian real estate firm QuadReal sued, alleging CA Ventures CEO Tom Scott engaged in self-dealing through an office lease at the property with an arm of his company backed by QuadReal.

QuadReal’s lawsuit claims Scott had an ownership interest in 448 North LaSalle alongside Javors’ firm Midwest Property Group, which started construction on the property in 2020. The complaint claims the deal between the CA Ventures affiliates and the property’s ownership siphoned money from investors by forcing entities tied to Scott’s company to enter office leases and subleases at above-market rates. The property is also listed as the global headquarters for CA Ventures, although the firm has never moved into it.

QuadReal last year took full control of a 20,000-bed student housing portfolio it previously owned jointly with CA Ventures. Scott has denied his company engaged in any wrongdoing or deceit when making CA Ventures affiliates that were backed by QuadReal guarantors of the lease for 448 North LaSalle.

Scott has also claimed that QuadReal knew the student housing vehicles it was investing in could be forced to pay the costs of the leasing deal between the LaSalle Street building’s ownership and the CA Ventures affiliates. QuadReal has claimed it wasn’t made aware of that when it partnered with CA Ventures. QuadReal’s complaint alleges that Scott helped the LaSalle Street landlord sue to evict his own firm. The 10-year lease terms between the CA Ventures affiliates that were backed by QuadReal would have had the tenants pay a total of about $3 million a year in rent, the suit said.

The student housing vehicle that QuadReal invested in was only expected to take one of the five floors in the building that Scott leased for CA Ventures affiliates. Scott, however, executed a guarantee that put the student housing vehicle on the hook for the entire lease in the event of a default by one of the other tenants tied to Scott’s company, the suit alleges.

An attorney for CA Ventures declined to comment. Scott declined to comment other than to note his firm would no longer be moving into the property and the lender now has its control.

QuadReal declined to comment, and Javors and his firm Midwest Property Group did not return a request for comment.

Multiple times last year, Javors’ ownership entity of the LaSalle Street building moved to evict CA Ventures affiliates from a lease of about five floors covering about 70,000 square feet. One of the complaints led to an April court ruling that awarded a $3.7 million judgment against the tenant entities and in favor of the building’s ownership. However, it’s unclear whether that money will be collected, considering the deed in lieu deal transferred ownership to the lender.

Javors also recently filed an eviction lawsuit against WeWork, which leased a 63,000-square-foot chunk of the building, before the coworking giant entered bankruptcy last year. However, WeWork has since struck an agreement with the landlord to remain a tenant in the building during its bankruptcy process.