Continental Realty Sues DiMucci in Wake of $94M Deal

JM Schapiro believes he was lied to about the health of five suburban Chicago shopping centers his company bought for $94 million in August.

Affiliates of Schapiro’s Baltimore-based firm, Continental Realty Corporation, sued DiMucci Companies, the seller in the deal for retail assets in Palatine, Naperville, Mount Prospect and Cicero.

The complaint, filed late last month in Cook County court, claims DiMucci misrepresented how well the properties were performing by covering up the fact that it accepted lease termination payments from one tenant and took the keys back from another.

Continental further claims that DiMucci, which also has offices in Palatine and Port Orange, Florida, assured it the leases on the properties were free from any obligations by the landlord to make unpaid tenant improvement payments or other concessions to commercial renters.

That turned out not to be the case, Continental alleges, as it’s been asked by tenants to finish up projects to improve HVAC systems and cover other costs they say are the landlord’s responsibility.

The priciest of Continental’s allegations involves the now-closed restaurant Juicy-O in the Naperville property, the 241,000-square-foot Fox River Commons at West Ogden Avenue and Illinois Route 59. Continental asked the court to order DiMucci to pay $1.9 million, alleging the seller assigned the lease to the buyer in August even though Juicy-O had handed back the keys to its space in the mall last summer.

DiMucci did not return a request for comment, nor did Continental and its attorney.

In total, Continental seeks $3.3 million, plus court costs and attorneys fees, for what it says are breaches of its purchase and sale agreement with DiMucci. The alleged violations involve four leases across the portfolio, with the others including a deal with Amish Furniture at the Naperville property, and a lease to the Health Mart store in Mount Prospect.

The portfolio, which spans more than 900,000 square feet in total, was 84 percent leased, with about 39 percent of it leased to grocery or drug stores at the time Continental announced the deal. The buyer said it had planned to target restaurant, entertainment and medical tenants to fill the 150,000 vacant square feet across the properties.

The largest property sold by DiMucci was the Cicero Marketplace, a 392,000-square-foot property at 3027 South Cicero Avenue in the village of Cicero that’s anchored by The Home Depot, Sam’s Club, Target and Food 4 Less.

The others were the 101,000-square-foot Northwest Shopping Center at 425-659 East Dundee Road in Palatine, the 145,000-square-foot Golf Plaza II at 1000 South Elmhurst Road in Mount Prospect, the 241,000-square-foot Fox River Commons at West Ogden Avenue and Illinois Route 59 in Naperville and the 24,000-square-foot English Valley Shopping Center at 237 West Dundee Road in Palatine.