LNR Forecloses on Schron, Lowenfeld’s 300 South Riverside

The West Loop’s most complicated game of financial chicken has finally hit the courthouse steps.

Less than two weeks after The Real Deal revealed a foreclosure lawsuit was under serious consideration by the lenders for the 23-story office building at 300 South Riverside Plaza in Chicago, the debt’s special servicer, LNR Partners, officially pulled the trigger. LNR on Friday filed a $167 million complaint against the landlord, a joint venture of Rubin Schron’s Cammeby’s International and David Lowenfeld’s World Wide Group, according to public records.

LNR, acting on behalf of bondholders in pools of securitized debt, has moved to seize the 1.1 million-square-foot office tower, ramping up a months-long standoff over multiple alleged defaults on a combined $342 million in debt tied to the property.

The lawsuit marks the messy climax of a bifurcated ownership structure gone wrong. On one side are the leasehold owners, David Werner and Joseph Mizrachi, who have been allegedly underwater on their own $175 million building loan since late 2022. On the other side are the fee owners — a venture of Rubin Schron’s Cammeby’s International and David Lowenfeld’s World Wide Group — who hold the land with a lease requiring ground rent payments from Werner and Mizrachi.

The house of cards collapsed in October when Werner and Mizrachi allegedly stopped paying ground rent checks. Without the cash flow, the landowners allegedly couldn’t service their own $167 million loan taken out in 2015 to fund their $220 million purchase of the ground from Werner and Mizrachi. LNR didn’t wait long to lose patience; after issuing a notice of default in November and accelerating the debt in December, the servicer is now asking a judge for a receiver to take the property away from the Cammeby’s and World Wide venture. LNR wants Scott Shefman of Farmington Hills, Michigan-based Friedman Real Estate appointed as receiver, legal filings show.

For Schron, the lawsuit marks a rare public slipup for his well-known New York-based firm, Cammeby’s.

For Werner and Mizrachi — prolific buyers known for high-leverage plays — the 300 South Riverside foreclosure filing is a stinging rebuke of the ground lease model once seeming like a clever way to slice the capital stack.

After buying the property for $194 million in 2010, they tried previously to sell it in the mid-2010s, but failed to generate offers matching their pricing ambitions of about $335 million. They eventually settled on selling the land only in 2015 and continuing to hunt for the right buyer for the building. But one never materialized before the office market got rocked by the pandemic, vaporizing values for properties carrying heavy debt, like the landlords at the 300 South Riverside building.

An attorney for LNR declined to comment. Representatives of Cammeby’s, World Wide, David Werner and Mizrachi’s firm Third Millennium Group didn’t return requests for comment. Shinhan Investment Corp., the South Korean lender whose $175 million loan to Werner and Mizrachi originated in 2017 before it fell into default several years ago, hasn’t returned multiple requests for comment on how it intends to resolve the broken deal tied to the building portion at 300 South Riverside.

Despite the fallout, Werner remains on an office distress buying spree in both Chicago and New York. Earlier this year, he and 601W Cos. nabbed the Loop’s 175 West Jackson Boulevard building for $41 million — an 87 percent discount from its 2017 price — following another bargain buy of the building at 303 East Wacker.

Werner’s 2025 New York run featured discounted acquisitions of the properties at One Dag Hammarskjöld Plaza for $270 million and 205 East 42nd Street for $165 million, plus a $700 million office-to-residential conversion loan for the building at 235 East 42nd Street.

Back in Chicago, Mizrachi and Hines are hunting an anchor tenant for a proposed 600,000-square-foot tower at 590 West Madison.

The foreclosure lawsuit for the 300 South Riverside property is set for an initial hearing in August, online court records show, but additional motions filed in the lawsuit between now and then could prompt an earlier hearing.