Situs Hits Embattled Chicago Landlord with More Foreclosures

The high-flying real estate reign of Jiazhao “Frank” Chen is hitting a dead end.

Once known for snapping up out of bankruptcy the previously acclaimed and now-shuttered Cité restaurant atop Lake Point Tower in 2022, Chen is now facing a tidal wave of foreclosures threatening to wipe out a chunk of his property empire across Chinatown and Bridgeport, public records show.

Major institutional lenders have run out of patience. New York-based Situs Holdings, acting on behalf of investors in securitized debt deals originated by CoreVest, launched a foreclosure blitz against Chen with four new lawsuits filed Tuesday in Cook County court. The outstanding amount in default that Chen allegedly owes on the loans is over $30 million. That brings the total amount of his allegedly delinquent loans on Chicago properties that lenders began pursuing for foreclosure this year to more than $50 million.More than 130 apartments across 27 properties are tied up in this litigation, ranging from small two-flats on Alexander Street to a 36-studio building at 701 South State Street, which is the most valuable building in the portfolio, purchased by Chen for $6 million in 2023. The building previously included the South Loop Club bar that held a coveted liquor license allowing alcohol sales until 4 a.m. It was still attached to the property at the time of the sale, but the establishment hasn’t reopened. Some interior renovation activity is visible through the property’s windows, however.

Likewise, a potential reopening of Cité or another restaurant concept in the Lake Point Tower penthouse has not been announced.

Chen and Situs did not return requests for comment on the financial disputes.

The math is grim for Chen. The Cook County Assessor’s Office appraised his combined portfolio at just $27.7 million in its most recent round of estimation for taxing purposes, putting its value well below water compared to the total debt load.

Situs claims Chen defaulted by failing to pay amounts due on the loans starting in September.

But it’s not just about the money — the lender also cited the state of some of the buildings in the portfolio as triggering alleged defaults. In the filings, Situs alleges Chen violated the requirements for owners to keep properties in good repair.

The lenders aren’t just complaining about peeling paint. They’ve raised the alarm over deferred maintenance, as well as alleged criminal activity taking place on some properties, though the complaints don’t specify what kinds of purported crimes.

These allegations give the lenders a track to ask a judge to appoint a receiver — a neutral third party who could take the keys away from Chen to secure the buildings and manage them while the litigation plays out.

Situs’ allegations join similar claims by at least two other lenders that filed foreclosure lawsuits this year against Chen-controlled entities over alleged loan defaults, with the previous disputes involving nearly $25 million in troubled debt.

Chen’s purchase of the former Cité space isn’t subject to the litigation, but the deal solidified him as a major commercial real estate investor in Chicago in 2022 when he bought it out of financial distress for nearly $5 million. The restaurant’s lakefront and skyline views were highly acclaimed, in part due to Lake Point Tower’s well-known status as being the only skyscraper and having the only condos east of Lake Shore Drive.