CWCapital Hits Suburban Chicago Office with Foreclosure

A one-two punch of corporate downsizing and fractured capital stack laid waste to a Deerfield office property, sparking a $24.5 million foreclosure lawsuit and sticking bondholders with a multi-million dollar loss that was already realized on a separate loan.

CWCapital Asset Management, a special servicer for troubled debt, filed a foreclosure lawsuit in Lake County Circuit Court in February against an affiliate of Hallandale Beach, Florida-based Kawa Capital, an owner of the property at One Parkway North Boulevard in the northern Chicago suburb, public records show.

The $24.5 million loan at issue is secured by a land lease at the property, where Kawa was collecting ground rent from the separate building owner, an affiliate of Miami-based Horn Eichenwald Investments. That firm was the owner of the leasehold interest in the parcel’s 258,000-square-foot office structure.

Horn Eichenwald — which appears to have been recently recast as a new firm led by Joseph Horn called H2A Capital — bought the property from Blackstone in early 2018 for $47 million, public records show. Horn brought on Kawa as a partner by selling it the ground for $30 million, while Horn later obtained a separate $12.7 million loan against the building. Kawa funded its land acquisition by taking out the $24.5 million loan now facing foreclosure, a debt originated by Citi Real Estate Funding and then sold off to commercial mortgage-backed securities investors being represented by CWCapital, public documents show.

Horn was first to default. The firm was late paying off the $12.7 million loan back in 2024. While the Horn venture continued to pay Kawa ground lease rent following the initial default on the $12.7 million loan, those checks have stopped being proffered in recent months, according to public loan data.

The ground payments stoppage is likely a result of the property’s anchor tenant hitting the exit. Office product wholesaler Essendant, joining a nationwide trend of corporate space-shedding, decided to vacate roughly 200,000 square feet at the property in December in favor of a much smaller, 40,000-square-foot space in nearby Lincolnshire, commercial real estate brokerages said.

Essendant agreed to pay a $4.25 million termination fee to break its Deerfield lease ahead of its scheduled termination in October 2027, court records show. The massive vacancy effectively severed the property’s cash flow, triggering defaults across both the ground fee and leasehold loans encumbering the site.

Essendant’s departure triggered a lease clause requiring Kawa to deposit over $2.1 million in reserve funds with the lender by early December 2025, the suit shows. Kawa failed to make the deposit and subsequently missed its January mortgage payment.

With the building hemorrhaging tenants and a Colliers property management team slated to walk away as of February, the lender warned the court the complex would soon be left abandoned and unprotected. On Feb. 11, Lake County Judge Daniel Jasica granted CWCapital’s emergency motion to appoint a receiver, putting Matthew Tarshis of Frontline Real Estate Partners in control of the parcel while the litigation plays out.

Although Kawa and CWCapital have tried to discuss a resolution to the loan default, so far they’ve been unable to agree on terms and the workout effort has stalled, loan servicer data shows.

Kawa declined to comment, while CWCapital, an attorney for the lender and H2A didn’t return requests for comment.

Kawa’s distress is only part of the carnage.

The delinquent leasehold loan owed by Horn had been languishing in special servicing with Rialto Capital Advisors for nearly two years as the borrower pursued a discounted payoff. While Rialto did not respond to requests for comment regarding the DPO’s status, newly released Morningstar Credit data reveals a bloody conclusion: The $12.7 million leasehold loan was officially liquidated Feb. 5, for a sale price of just over $6 million. The fire sale resulted in a $5.3 million loss taken by the CMBS trust, which is a separate debt package from the Kawa ground lease loan.

Now, Tarshis is evaluating the best path forward to bring the property out of financial distress. A court date is scheduled for May 22 for Jasica to review Tarshis’ initial report on the property’s operations.