Another lender is coming after CA Ventures, and this time the Chicago-based development firm may not be able to simply hand the keys to its North Side apartment complex over to the bank to end the dispute.
Old Second National Bank is suing the CA Ventures affiliates that once owned the vacant development site at 3015 North Southport Avenue that’s approved for a five-story, seven-unit apartment complex, as well as the next-door building that the firm transformed from a former funeral home property into a mid-size apartment building, according to Cook County court records.
The bank wants an affiliate of CA Ventures — which is already facing a slew of lawsuits and settlement payments with lenders, investors and former employees — to cough up more than $7 million to satisfy a $10.7 million loan the firm took out in 2018 using the properties as collateral, the lawsuit, filed June 20 in Cook County court, shows.
CA Ventures earlier this year got city approval to extend its timeline to build the seven-unit project on the Southport Avenue site, years after it had already received a green light for an earlier iteration of the project that was set to expire.
The recent city zoning approval process was driven by the embattled developer’s plans to exit the property with a sale, as the firm is already facing foreclosure lawsuits filed earlier his year for several other North Side assets, including another development site where it once pitched a small apartment building but never broke ground before its city approvals for construction ran up against a yearslong deadline.
CA Ventures sold the Southport property for a little less than $1.5 million to real estate investors Sarah and Paul Dukach, who plan to employ the seven-unit plan that was re-approved by the city earlier this year. Affiliates of CA Ventures had eyed building on the site as far back as 2018 but never did.
“The price was there because it came with plans for a seven-unit building,” Paul Dukach said. “We knew they had a pending foreclosure suit on it, and that’s why it was done in such a hurry. We made sure the zoning they had changed a couple years ago was intact and renewed.”
But the sale price for the development site wasn’t nearly enough to satisfy CA Ventures’ debt to Old National Bank, which said that the developer failed to come up with the cash and meet other terms required to extend the loan’s maturity date. The developer, as of earlier this year, had already pushed out the loan’s maturity date well beyond its initial due date, the lawsuit shows, and it had paid down about $2 million of the $10.7 million total debt.
CA Ventures is far from the only real estate player feeling pain, as interest rates eat into property values and depress the volume of sales across asset classes, even amid rising Chicago-area multifamily rents, which have been increasing at nearly the fastest pace in the nation.
Earlier this week, lender First National Bank of Brookfield filed several foreclosure lawsuits against an entity called Logan World LLC, which Illinois records show is controlled by Eric Meyers. The suits seek to strip Meyers’ ownership of a portfolio of a handful of small apartment complexes in the Northwest Side’s Belmont Cragin area that have debts totaling about $4 million.
CA Ventures still owns the building at 1356 West Wellington, where there are set to be at least three apartments available to rent in coming weeks, according to a listing. A formal foreclosure proceeding hasn’t yet been initiated for that property, according to public records. The developer could hang onto the property if it comes up with the cash, but its unclear if the firm or its investors will consider pumping more money into the property.
CA Ventures CEO Tom Scott said the Southport site was a “legacy development hit by crisis,” meaning the Covid-19 pandemic, followed by rising interest rates, delayed construction. Investors who own the equity in the property declined to step up and infuse capital to pay off the loan or fund construction on the development site, which would have avoided defaulting on the debt, Scott said. The firm plans to “sell it and work it out,” he said.
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Old Second wants a judge to order CA Ventures to pay the loan’s remaining balance of $7 million, plus $2,482 in interest for each day the debt remains delinquent after June 7.
Meanwhile, a landlord entity that reportedly includes Scott and developer Jay Javors recently surrendered 448 North LaSalle Street to a lender. It has agreed to pause litigation and enter settlement discussions with a QuadReal Property Group affiliate. QuadReal had sued the property owner, claiming CA Ventures leadership improperly entered a lease at the distressed building on behalf of QuadReal.
CA Ventures affiliates, including those that were involved with the properties at issue in Old Second’s lawsuit, have also recently agreed to continue arbitrating with investors who raised $3 million to fund various Chicago-area development projects being led by the firm and its partners, which they claim in a separate lawsuit didn’t pan out as the firm advertised.