BofA Wins Bid to Name Receiver for Chicago Block 37
Bloomberg reports: Bank of America Corp. won a court bid to appoint a receiver for Chicago’s Block 37 shopping mall after the developer defaulted, taking control of one of the city’s largest projects.
CB Richard Ellis Group Inc., the largest publicly traded commercial property broker, will be the receiver, Cook County Circuit Court Judge Margaret Brennan ruled today.
Bank of America sued to foreclose on the 278,000 square- foot project after developer Joseph Freed & Associates LLC defaulted. The firm owes $128.5 million, according to the bank. Block 37 is in the heart of Chicago’s downtown and is being built as a “world-class collection of amenities and attractions” including shops, restaurants and theaters, according to Joseph Freed’s Web site.
“We are pleased with the ruling,” Shirley Norton, a Bank of America spokeswoman, said in a statement.
Joseph Freed will appeal the decision, Larry Freed, president of the company, said in a statement.
“We strongly disagree with the court’s ruling,” Larry Freed said. “We still own Block 37 and will fight to protect our rights, reputation and investment.”
Bank of America asked the court to appoint the receiver to manage the property and complete construction, the bank said. The developer has been in default since at least March 2008, the bank said. Joseph Freed & Associates is the largest privately owned real estate development company in the Midwest, according to its Web site. It was founded in 1965.
Brennan heard arguments for almost two hours this morning in a courtroom across the street from Block 37.
Bank of America alleged the developer defaulted on the loan because the cost to finish the project is more than budgeted. Anderson said today that figure is $41.6 million. The bank also claimed guarantors Larry Freed, and DDL LLC, a limited liability company, didn’t have at least $5 million of unrestricted liquid assets, violating the loan agreement.
The developer said in court filings the project shouldn’t be put into receivership because two of the alleged defaults are technical and non-monetary and the bank has known about them both for more than a year. The company said it’s not in default on payment of the loan because it doesn’t mature until March 2011 and there is an extension option on it through March 2012.
About $537 billion in U.S. construction loans have defaulted and been foreclosed on this year, according to a report by the New York-based real estate research company Real Capital Analytics. Lenders recovered an average of 43 percent of what they were owed, Real Capital said.
The case is Bank of America v. 108 N. State Retail LLC, 09-CH-39930, Illinois Circuit Court, Cook County (Chicago).
View the full article on Bloomberg: BofA Wins Bid to Name Receiver for Chicago Block 37
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