Investors Andrew and James Vaccaro have another fight on their hands after spending several years expanding their office holdings in Greektown.
The latest threat to their assemblage comes from Marc Realty, a prominent Chicago-based commercial real estate firm headed by Larry Weiner and Jerry Nudo.
The Vaccaros own the eight-story, 116,000-square-foot office building at 850 West Jackson Boulevard that is subject to a ground lease with Marc Realty, the underlying land owner.
The Vaccaros failed to pay $404,000 in property taxes on the building and racked up about $2 million in liens from various contractors and business services companies, a lawsuit filed by Marc Realty in July alleges. One of the liens was filed by an affiliate of the Vaccaros, Crayton Advisors, which operates the Vaccaros’ real estate holdings.
The delinquent tax and lien payments constitute a default on the ground lease, Marc Realty claims. The ground owner is seeking to take over the leasehold ownership, which the Vaccaros bought from Marc in 2016 while agreeing to become Marc’s ground tenant.
Marc’s lawsuit adds to the mounting number of disputes over Chicago’s battered office market, which remains at a record-high vacancy rate of more than 25 percent. Mid-market buildings that are outside the top-tier of quality — such as the Vaccaros’ Greektown properties — are feeling the worst of the pain.
The Vaccaros’ venture was said to have paid about $35 million for the building and control of adjacent parking lots, according to news reports at the time, but the price wasn’t publicly recorded.
Following their acquisition, the Vaccaros in 2019 refinanced their $10 million loan on the leasehold at 850 West Jackson by taking out a $39 million loan with Huntington Bank, which was secured by both the leasehold and another office owned by the investors, at 820 West Jackson. The 820 West Jackson property — which also spans eight stories and about 175,000 square feet — isn’t subject to a ground lease.
Because Huntington did not step in to resolve the Vaccaros’ delinquent payments, the bank cannot take over ownership of the building at 850 West Jackson, an attorney for Marc Realty stated in the suit. Instead, Marc Realty has the right to seize the building, according to the legal filing. It is also seeking about $2 million in damages from the Vaccaros to resolve the investors’ debts to the county and various businesses.
Representatives of Marc Realty and Crayton Advisors didn’t respond to requests for comment.
The 850 West Jackson Property isn’t the only one of the Vaccaros’ Greektown properties that is in financial and legal peril.
Last year, Aflac filed a $36 million foreclosure lawsuit against the Vaccaros after they failed to pay off a loan backed by office buildings at nearby 833 West Jackson and 322 South Green Street, as well as a surface parking lot at 310 South Green that was slated for redevelopment.
The lender is also seeking personal judgments against the Vaccaros, who Aflac claims signed guarantees to pay for and cure any defaults made by the LLCs they control that own the real estate.
John Abell, managing partner for Crayton Advisors, told The Real Deal at the time that the lender hired a new special servicer for the property and that the foreclosure was filed prematurely. He said the loan came due at a time when capital was unavailable for many landlords seeking loans but that they anticipated resolving the issue “in about a week.”
A year later, the group still hasn’t secured a new loan, and the foreclosure lawsuit is still pending.
Meanwhile, Marc Realty is fighting off a series of its own legal battles.
A tangled web of at least six ongoing lawsuits totalling about $60 million in disputed funds have ensnared the local firm, one of Chicago’s biggest commercial real estate owners. Each of those lawsuits — which involve assets in the industrial and multifamily sectors — are all still working their way through the courts.
Marc has also been on the other side of post-pandemic office distress. It lost a 124-year-old Loop office property at 216 West Jackson to a lender’s $16 million foreclosure lawsuit last year. Marc had paid $23 million for the 198,000-square-foot building in 2013.
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