Drew Breneman has pounced on his next Chicago multifamily purchase with a Lincoln Square deal he bought out of foreclosure while its developer, CA Ventures, stays in survival mode while facing a slew of lawsuits and layoffs.
Breneman’s eponymous firm Breneman Capital paid a little more than $7 million to buy the 25-unit property the Chicago-based CA Ventures built at 2247 West Lawrence Avenue.
The property was listed by Greenstone Partners’ Jordan Multack, which originally listed it for nearly $9 million, and represented both the buyer and seller in the transaction. The seller, an entity tied to CA Ventures and backed by its investors, was hit with a foreclosure lawsuit earlier this year, when its lender, Northbrook Bank & Trust, alleged the landlord was late paying off at least $6 million secured by the property.
“We were drawn to this particular property since it checks all the boxes we typically look for: Well-located, high-quality construction and an immediate path to increase the value and cash flow quickly through leasing the vacant retail space and adjusting the apartment rents to market rates,” Breneman said in a statement.
The sale is the latest move by CA Ventures — a development shop that has claimed it owns global assets valued at $15 billion — to unload debt-ridden properties and trim its expenses as interest rate hikes over the past two years crushed property values. The firm’s lenders, financial backers, former leaders and, most recently, a major architecture and design firm have filed lawsuits against CA Ventures-linked entities alleging it has missed paying its bills, while over-promising and under-delivering on its development and financial obligations.
CA Ventures has also slimmed its staff in recent months by eliminating positions and laying off some employees, CEO Tom Scott confirmed, though he declined to say how many people have been impacted so far.
The firm is focused on shedding expenses to get in a position to grow the company once again, perhaps by becoming a buyer if it can get its balance sheet in order in time to take advantage of the depression in real estate prices, Scott has previously said.
Northbrook Bank was repaid what it says it was owed by the landlord of 2247 West Lawrence through its sale, according to Scott.
However, global architecture firm Goettsch Partners, based in Chicago, has become the latest to hit CA Ventures with a lawsuit, alleging in a Cook County court complaint that the firm owes $1.7 million to Goettsch for its work planning a 63-story, mixed-use tower with 500,000 square feet of offices and 396 apartments in Austin, Texas that never got off the ground. Goettsch alleges CA Ventures hasn’t paid the firm for years, despite its work on the failed $620 million project that started in 2019.
Goettsch — which accused CA Ventures of “false and deceptive business practices” — didn’t return a request for comment.
Meanwhile, CA Ventures argued last month that Goettsch’s complaint should be dismissed because it never struck a true contract with the firm. Instead CA alleges Goettsch was suing based on vague promises and assurances made over emails and a beer members of each firm shared.
But CA Ventures, along with several developers, put its pencils down in 2020 as the pandemic struck and shocked capital markets, an event that the developer said it didn’t foresee and nullifies any fraud claims based on its stated ability to pay the architecture service made prior to the health crisis.
CA Ventures is still working to resolve alleged defaults on two other North Side Chicago debts. They total more than $34 million and are tied to the vacant development site at 750 West North Avenue, where a former CA Ventures affiliate Springbank Capital once planned to build an eight-story, 92-unit apartment complex, as well as the former Sears store that CA Ventures converted into a 59-unit housing complex at 1900 West Lawrence Avenue.
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