A long-stalled redevelopment of Blue Island’s shuttered MetroSouth Medical Center has collapsed, revealing larger financial issues for the firm planning the project.
Delray Beach, Florida-based Lockwood Development Partners bought the 12.5-acre campus with a vacant 550,000-square-foot main hospital building for more than $20 million in 2020, with plans to transform the property into senior and veteran housing, according to public records.
The company’s proposal called for senior living units equipped with kitchenettes, alongside amenities including a movie theater, spa and library. The proposal also promised to fill the void left by the hospital’s closure with a new grocer, medical offices and a 23-room hotel for visiting families.
But Lockwood defaulted on $44.2 million in debt tied to the project, according to a foreclosure complaint filed by a lender last month in Cook County Circuit Court.
The developer’s financial problems aren’t confined to Chicago’s south suburbs, court documents show. The Blue Island foreclosure is one of at least seven simultaneous alleged defaults totaling $178 million in troubled debt owed by Lockwood, exposing a portfolio-wide collapse for the firm led by Charles Everhardt and Edward Dovner.
“We are doing a sale of all assets to a third party which the lender has approved,” Everhardt said. He claimed the sale price will be more than the debt Lockwood owes.
The firm’s hotel portfolio, including properties in Pennsylvania, Georgia, Tennessee and elsewhere, is being sold as a package to one buyer, while the Blue Island property is being sold separately to a data center developer, Everhardt said in an interview.
However, he said he was unable to name the buyers or disclose exact pricing due to an agreement with the lender; the lawsuit doesn’t mention a sale. “The foreclosure, as I understand, will be dismissed,” he said.
Blue Island city officials didn’t return requests for comment. But Everhardt said data center development is the “highest and best use” for the former healthcare site.
“There is fiber that runs across the railroad tracks adjacent to the property. And we have been able to secure a power solution,” he said.
The lender pursuing foreclosure is an affiliate of Puyallup, Washington-based Builders Capital, which originated nearly $32 million in loans to Lockwood’s Blue Island project in 2022. Builders Capital later provided a second mortgage of more than $15 million to the project in 2024, but now almost all of the principal remains outstanding and is well past maturity, records show.
An attorney for Builders declined to comment.
Capital Crunch
Builders, in its Dec. 19 complaint, claims Lockwood failed to pay off the principal balance by the loan’s extended maturity date of March 31, 2025. The lender also accuses Lockwood of allowing unauthorized liens to pile up against the property, constituting additional violations of the loan agreement.
The suit marks a reversal of fortunes for a project that appeared to be finding its footing just over a year ago. In September 2024, Lockwood reportedly paid nearly $137,000 in outstanding bills to the city of Blue Island to settle code violations and clear the path for permits. At the time, city officials expressed cautious optimism that the delayed redevelopment was moving a step closer to reality.
Instead, the project appears to have hit a financial wall.
The lender claims six other Lockwood loans are also in default.
- Blue Island, Illinois: $31.9 million original principal (now $44.2M due)
- Memphis, Tennessee: $28.9 million loan
- Tulsa, Oklahoma: $28.9 million loan
- Orlando, Florida: $25.6 million loan
- Dayton, Ohio: $23.5 million loan
- Wyomissing, Pennsylvania: $21.3 million loan
- Marietta, Georgia: $17.8 million loan
Most of these loans, like the Blue Island debt, matured in March 2025, according to legal documents. The Tulsa, Orlando, Dayton and Marietta loans appear to be for hotel properties Lockwood lists on its website’s portfolio page. The Pennsylvania property is encountering similar issues to the Blue Island project, according to a September report by SpotlightPA.org.
Local officials there moved to seize the vacant site via eminent domain in 2025, but a county committee voted in November to remove the property’s “blighted” designation after ownership promised to install HVAC units to prevent the sprinkler system from freezing, according to the publication. The reprieve came despite objections from Wyomissing officials, who argued the long-shuttered hotel remained a safety hazard.
In Blue Island, the road to revamping the MetroSouth site has been rocky from the start, also plagued by delays and friction with city officials over property maintenance.
The lender is asking the court to appoint a receiver to take immediate control of the Blue Island property and is pursuing a deficiency judgment against Everhardt and Dovner personally, alleging they waived their “right of redemption” — a move that could fast-track the property to a judicial sale. The foreclosure lawsuit is scheduled for a June 22 case management hearing, online court records show.
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