Add Jack Buck to the herd of Chicago-area office landlords facing foreclosure as financial distress further mounts amid sluggish leasing demand and higher interest rates.
The son of big-time Chicago developer John Buck controls a venture that owns the 180,000-square-foot office building, at 6400 Shafer Court in Rosemont near O’Hare International Airport, where its lender is owed more than $18 million, according to a foreclosure lawsuit filed in Cook County court this week.
The debt was originally supposed to mature in January 2022, but the younger Buck received several extensions, despite the property’s sliding performance. It was down to 55 percent leased last year, when the lender granted its latest maturity extension as Buck’s Chicago-based firm Free Market Ventures hunted for financing to pay it off.
With the debt entering foreclosure proceedings, Buck’s venture makes for the latest victim of the dropoff in office demand that has hit the O’Hare and suburban markets especially hard — more than 30 percent of office space across suburban Chicago is vacant, and other big loans, including the $128 million debt tied to the Riverway complex near the airport, have also fallen into foreclosure.
Buck’s firm didn’t return requests for comment, and an attorney for it declined to comment. A lawyer representing the lender in the foreclosure suit didn’t return requests for comment.
The Shafer Court loan was issued back in 2019 by Varde Partners, which packaged it up with other commercial real estate debts into bonds that were sold off to investors. Minneapolis-based Varde also seized another suburban Chicago office property, the 678,000-square-foot Triangle Plaza in Schaumburg, where a venture of former building owner Alliance HP owed a $78 million loan and handed back the keys rather than fight a foreclosure.
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The special servicer of the loan, representing bondholders, and the driver of the lawsuit against Buck’s firm, is Trimont Real Estate Advisors. It requested the court approve a motion to hire Dallas-based Chris Neilson of Trigild as the Rosemont property’s receiver, a position that would require him to oversee the property’s operations and try to start its turnaround while the foreclosure case plays out. The court had yet to rule on the motion as of Thursday.
Buck’s firm bought the eight-story property for just under $18 million in 2017, and it refinanced with the loan originated by Varde in 2019, when the property was appraised at $21 million and 82 percent leased, according to loan data.
It’s not the first time the property has been dragged through distress — there have been multiple previous episodes. Buck bought it from a venture led by investor Michael Nortman who picked it up for $10.8 million in 2012, down from its 2010 sale price of $11.5 million amid a previous foreclosure case initiated against a venture of former real estate brokerage Grubb & Ellis, which was acquired by Newmark in 2012.