CA Ventures has another creditor knocking on its door to serve court papers.
The Chicago-based development firm has been hit with another foreclosure lawsuit, this time over a $31 million debt from Huntington Bank that was used to redevelop a suburban Kansas City senior housing property, according to court records.
Tom Scott’s CA Ventures has been working through many sore spots within the large multifamily portfolio it once said was worth $15 billion, with its senior housing arm perhaps its worst-hit division.
In addition to Huntington seeking to take over the property’s ownership through a foreclosure auction with a lawsuit filed in Johnson County, Kansas, the lender is also leaning on CA Ventures in Cook County court to cough up a $4 million partial guarantee it promised to pay in the event of a default by the ownership LLC as part of the debt deal negotiations.
It’s at least CA Ventures’ fourth Midwestern senior housing property to face a loan default in recent months, and is among a handful of other multifamily assets under the landlord’s control to have been hit with foreclosure lawsuits or stripped away by lenders.
CA Ventures took out the Huntington loan in 2019 as part of a plan to renovate an existing 120-unit senior living property at 101 West 151st Street in Olathe, Kansas, which it had owned since converting the parcel from a Holiday Inn hotel starting in 2016. It included both independent-living and memory-care units.
The developer turned the 120-key hotel into a 96-unit facility and constructed a 60-unit independent living building next door. It was completed three years ago.
But after senior housing and communal living facilities were hammered by the pandemic, CA Ventures defaulted on the loan, Huntington alleges. The developer entered into a forbearance agreement with the lender last year to extend the amount of time it had to pay back the debt without further penalty. Still, the borrower couldn’t repay at the later maturity date, Huntington’s lawsuit alleges.
A person with knowledge of CA Ventures’ operations said the Olathe property’s value is beneath the debt owed by the asset and will likely be taken over by its lender. Attorneys for Huntington didn’t return requests for comment.
CA Ventures is working to clear several legal hurdles. It was recently relieved from its obligations to an industrial development arm, called Centris, after previous financial backers Davidson Kempner and Monarch Alternative Investments took it over. Although a lawsuit against CA Ventures, filed by a former C-suite executive requesting $6 million in pay he said he was owed, complicated the transaction.
Another CA Ventures arm also appears to have come to a settlement, at least temporarily, with a Colorado-based investor who, in March, sued an affiliate of the firm that led the development of a West Sacramento, California, multifamily project. The investor alleged CA Ventures owed it $10.5 million for the equity put into the project because the developer failed to come up with funding needed to complete the project.
Elsewhere in the Kansas City area, CA Ventures — which owns the Anthology brand that operates its senior housing portfolio — is delinquent on a separate $75 million loan tied to properties in Overland Park, Kansas, and two others in suburban Chicago, in Wheaton and Grayslake.
That debt was taken out from heavily scrutinized multifamily lender MF1 with an adjustable interest rate, meaning the debt service cost on the property has floated to nearly 200 percent, or $5.6 million, more than the dealmakers anticipated when the loan was originated in 2021, as a result of federal interest rate hikes, according to loan servicer data collated by ratings agency Morningstar Credit.
Late last year, CA Ventures sold off a large, multi-state senior housing portfolio it developed in partnership with Goldman Sachs, shortly after Scott, who founded CA Ventures as a student housing specialist that branched out into other sectors, said that senior housing was struggling.
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