Mortgage foreclosure lawsuits seeking to collect nearly $20 million have been filed against two former Chicago-area Kmart stores owned by Kimco Realty Corp., the largest landlord of the troubled retailer, which is in Chapter 11 bankruptcy.
The cases come as landlords of Troy, Mich.-based Kmart Corp. prepare for a new round of about 320 store closings that could be announced as soon as this week.
An 80,800-square-foot store on West Peterson Avenue on Chicago’s North Side is the subject of a Cook County Circuit Court case, while a 91,200-square-foot Aurora location is the subject of a Kane County Circuit Court case.
The foreclosures were filed in December by the trustee for owners of securities backed by the mortgages and issued in 2000 by GMAC Commercial Mortgage Corp.
In July Kimco stopped paying interest on $60.8 million in non-recourse loans on seven former Kmarts, including these locations. A spokesman for the New Hyde Park, N.Y.-based company said loans on the other five sites, with different lenders, have been restructured.
Kimco is also close to restructuring the local loans, he said. The trustee’s attorney, Craig E. Reimer, a partner with Mayer, Brown, Rowe & Maw, wouldn’t comment.
Kimco has re-leased or sold seven of its 15 closed Kmart stores in Illinois. The court-appointed receiver for the local stores, Daniel Hyman, president of Chicago-based Millennium Properties Inc., would not comment about any sale or lease of the sites.
Katten lease: As expected, Katten Muchin Zavis Rosenman has renegotiated and extended its lease at 525 W. Monroe St., an 851,000-square-foot building owned by New York-based Tishman Speyer Properties LP and some Katten partners.
The law firm, at one time a potential anchor tenant for a new office building, will take about 245,000 square feet under a lease that expires in 2020, confirmed a spokeswoman for Chicago-based real estate firm Jones Lang LaSalle Inc., which advised Katten. The new lease replaces one that expired in 2015 with a termination option in 2005.
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GE leases to GE: Winding down its affairs, the auto financing arm of GE Capital Corp. didn’t look far for a tenant for most of its 253,000-square-foot building at 540 W. Northwest Highway, Barrington.
The General Electric Co. unit has a ground lease for the site of the building, developed in 1997. GE Medical Systems Technologies Inc. will sub- lease 224,000 square feet, said Steven King, senior vice president with Northbrook-based real estate firm Grubb & Ellis Co., which advised the auto lease unit. CB Richard Ellis Inc. represented GE Medical.
Charter Consulting moves: Separately, Grubb & Ellis represented Charter Consulting Inc. in a lease for 21,000 square feet of space at One IBM Plaza, 330 N. Wabash Ave.
The Chicago firm, founded in 1997, will move from 200 N. LaSalle St., where it had 11,000 square feet.
West Town loan: Fifth Third Bank, which in 2002 filed a civil foreclosure case to collect $12.1 million on CityScape Lofts, a stalled West Town residential project by Churchill Equities, has sold its loan, for about $3 million, to a group of Russian immigrant investors, sources said.
Title to the property, 824 W. Chicago Ave., has been handed over to the group, according to property records.
An agent for the investors, Dmitriy Meleshko, an officer in Wheeling-based business service firm Geltco Inc., could not be reached for comment.
Suburb investment: Despite the dramatic drop in leasing, the investment market for suburban office properties was strong in 2002, boosted by robust demand for newer, Class A properties, according to a report by real estate firm CB Richard Ellis.
The total value of Class A properties sold last year nearly doubled, to $600 million, compared with 2001, while the average price slipped 1 percent, to $152 per square foot, the study found.
Suburban office building investment market
The total value of suburban office building sales remained steady in 2002, despite predictions of a slowdown. Prices rose slightly as average capitalization rates, or returns on investments, dropped to 9.4 percent from 10.4 percent in 2001.
2001 2002 PERCENT CHANGE
Total sales $860,738,904 $852,934,075 -0.91%
Average price per square foot $110 $113 2.72%
Number of transactions 53 37 -30.2%
Source: CB Richard Ellis Inc.
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