Lender Wins $10M Judgment After Seizing Chicago Garage

The previous owners of a literary-themed downtown Chicago parking garage are on the hook for nearly $10 million after the lender seized the building through foreclosure this fall.

The lender, a subsidiary of global reinsurance firm Swiss Re, took over the Poetry Garage at 201 West Madison Street in an October sheriff’s sale with a $21.5 million credit bid. This month, the lender secured a court order holding the ownership entities liable for the $9.6 million shortfall on the loan.

The borrowers, a group of investors controlled by Syndicated Equities’ Richard Kaplan and John Hammerschlag of Hammerschlag & Co., defaulted on the $33.2 million loan when it matured in March and they failed to pay the full balance, court records show. Kaplan and Hammerschlag were named as sponsor guarantors on the loan.

Neither Syndicated Equities nor Hammerschlag immediately responded to requests for comment.

The 10-story, 1,157-space garage in the Loop gets its name from the dedication to poets, like Emily Dickinson and Robert Frost, that mark each of its floors. The building has 385,310 square feet, including 19,312 square feet of retail.

Swiss Re began foreclosure proceedings in April, according to Cook County Circuit Court records, seeking repayment of the full loan, as well as $275,000 in default interest.

In a December ruling, Judge Debra Ann Seaton found the borrowers owed $33.2 million to Swiss Re. A receiver had been appointed who had nearly $2 million in cash collateral, court records show.

After reducing the total owed by the $21.5 million credit bid and $2 million cash from the receiver, the landlords owed an additional $9.6 million, according to the judge’s ruling.

Court records paint a picture of years of financial struggle for the landlords before the $33.2 million loan came due this spring. As downtown office occupancy plummeted because of the pandemic, the owners secured three separate loan modifications between June 2020 and March 2021. The agreements granted temporary interest-only periods and swept the borrower’s cash flow to keep the deal intact.

When the loan finally matured this spring, Swiss Re wasn’t in a mood to negotiate. Court records show the lender rejected $800,000 in late payments the borrowers tried to make after the deadline. Swiss Re wrote in its filing that it rejected the payments because “they do not constitute full payment of the entire outstanding balance.”