Feil Facing Beltway’s Foreclosure on River North Office

A few weeks after snagging a loan for one Chicago office and retail building, Jeffrey Feil is set to let another go back to its lender.

His New York-based firm Feil Organization owns a large portfolio of commercial real estate in Chicago, Florida and New York. It was hit this week with a $15.3 million foreclosure lawsuit over a debt gone wrong at 730 North Franklin Street.

At 92,000 square feet, it’s a relatively small building for Feil — which also jointly owns a high-end retail and office building at 645 North Michigan Avenue that was just recapitalized with a $55 million loan. But it’s another example of a big-time landlord caught up in financial distress as office tenants shift away from River North lofts and interest-rate surges squeeze borrowers.

Maryland-based Beltway Capital in October bought the debt secured by the Franklin Street building at a significant discount from the $15.3 million that Feil borrowed, according to public records and a source familiar with the property. The loan was originated in 2017 by Sun Life Assurance Company of Canada, which sold the debt to Beltway, according to Cook County records and the lawsuit Beltway filed in county court.

It’s unclear how large of a discount on the debt Beltway notched when it took over the right to foreclose on the building.

Feil declined to comment, and neither Beltway nor an attorney representing the firm returned requests for comment.

Beltway alleged Feil missed the monthly payment on the loan due in November and didn’t cure the default during a grace period that ended in December, the lawsuit shows. Feil took out the loan around the same time the landlord bought the building, in 2017, for $23.3 million.

It was more than 90 percent leased when Feil bought it, with satirical media outlet The Onion as the building’s largest tenant. But the property’s occupancy has dipped in recent years since the pandemic weighed on demand for loft-style offices.

Many mid-size tenants have cut their real estate footprints to go to hybrid workplace models or fully remote. Tenants that remain in the market have increasingly flocked to new or recently remodeled downtown towers that offer the best amenities.

Feil is unlikely to fight the foreclosure and will probably hand back the keys to Beltway, according to a person familiar with the property.

This isn’t the only landlord to take a loss in River North’s loft office scene in recent months. KBS Growth & Income REIT in December sold the seven-story building at 213 West Institute Place for $17 million, after paying $43.5 million to buy it in 2017.