At a time when office tenants are hard to come by, Chicago-based R2 may have to give one of its occupants the boot.
R2 filed an eviction lawsuit against tech firm Azumo, a tenant at its Goose Island office building, after the company racked up more than $161,000 in missed rent payments, according to Cook County court records.
Azumo has not made its $17,000 rent payments for several months and was notified of its late payments in August, according to the still-pending lawsuit. The company has paid down at least some of its late payments since August, which totaled $219,000 at the time.
Azumo, which also has an office in Shenzhen, China, makes energy-efficient tech device display screens that reduce glare in various types of lighting.
Azumo chose Chicago as its U.S. headquarters when the firm signed a 20,000-square-foot lease with R2 for the building at 1200 North Branch Street in late 2022.
An attorney for R2 and representatives of Azumo did not respond to requests for comment. R2 CEO Matt Garrison declined to comment.
The pending eviction put a wrinkle in R2’s ongoing efforts to invest in the Chicago office market despite its stubbornly high vacancy rate.
In January, R2 bought 150 North Michigan Avenue at one of the biggest discounts of the year so far.
CBRE Investment Management bought the 41-story, 655,000-square-foot building for $121 million, or about $185 per square foot, in 2017. R2 paid half that amount, or about $92 per square foot.
R2 CEO Matt Garrison previously told The Real Deal that the company is on the lookout for similar opportunities.
But a few months after the Michigan Avenue purchase, Maryland-based Beltway Capital Management bought a $42 million underperforming loan note tied to a West Loop office portfolio owned by R2 and Heitman, which included 641 West Lake Street, 901 West Jackson Boulevard and 130 South Jefferson Street.
Although the sale of the loan was a sign of trouble for the West Loop properties, the new lender could keep R2 in the driver’s seat.
In a similar transaction, Beltway Capital initiated foreclosure on a River North loft office building at 730 North Franklin Street owned by Feil Organization, just a few months after buying the property’s $15.3 million loan note.
A deed-in-lieu of foreclosure agreement was finalized a few months later. In a vote of confidence in R2, Beltway tapped the firm as an investment partner in the property, tasking it with operating the building.
R2 confirmed it will invest capital in a turnaround effort, though the exact amount wasn’t disclosed.