2 Gold Coast sites face foreclosure
By Andrew Schroedter
Crain's Chicago Business
August 19, 2009
(Crain’s) — A lender has sued to collect more than $50 million on two well-known Gold Coast development sites controlled by Chicago developer Mark Hunt, including the shuttered Esquire Theater.
In the larger of the two suits, Anglo Irish Bank Corp. is seeking to collect $33.2 million for the nearly half-acre Esquire site at 58-104 E. Oak St., where Mr. Hunt had once planned to demolish the 1930s-era theater, known for its vertical neon marquee, and build a boutique hotel.
When that plan hit a wall because he couldn’t get zoning, Mr. Hunt later changed directions and tried to build a retail development. But that proposal stalled, too, and the bank now alleges that Mr. Hunt failed to pay off a loan, with an original amount of $32 million, when it matured March 26, according to the complaint, filed last week in Cook County Circuit Court.
Separately, Anglo Irish filed to foreclose on the former Cedar Hotel, a mostly empty building that Mr. Hunt owns at 1112-1118 N. State St., seeking to collect nearly $18.7 million. As with the Esquire property, Mr. Hunt wanted to bring a trendy hotel to the site, but a deal with Morgans Hotel Group Co. collapsed late last year amid the deepening the financial crisis.
The State Street loan, with an original amount of $18 million, doesn’t mature until Oct. 3, but Anglo Irish contends that Mr. Hunt defaulted by failing to pay off three liens on the property totaling $1.26 million.
“The banks, when they smell blood and see things start to go bad, they don’t want to be the last ones holding the bag,” says Barry Schain, a principal with Northbrook-based Next Realty LLC, which isn’t involved with either property.
Messages left for Mr. Hunt were not returned. Hugh McNally, a senior vice-president in the Chicago office of Anglo Irish, declined to comment.
The lawsuits are the latest twists in what’s been an up-and-down year for Mr. Hunt, the founder of Chicago-based M Development LLC.
He completed a long-term lease with Apple Inc. for a high-profile store in the Clybourn Corridor, but he also faces a $13.5-million foreclosure lawsuit on a Lincoln Park retail project. And Jeffrey Shapack, M Development’s president, left the firm this summer.
The Esquire project showed signs of unraveling last month when an affiliate of real estate firm Endeavor Cos. said that on Sept. 1 it would auction off an ownership stake in the Oak Street property to collect a $2.9-million debt. Endeavor’s investment apparently was in the form of a mezzanine loan, which is like a second mortgage. The Esquire closed in 2006.
The Anglo Irish foreclosure suit puts pressure on Chicago-based Endeavor as well as Mr. Hunt. If Mr. Hunt cannot restructure both loans, then Endeavor must still deal with the Anglo Irish debt or risk being wiped out. Endeavor is not a defendant in the foreclosure suit. Josh Carl, the firm’s founder and managing principal, could not be reached for comment.
At the Cedar Hotel site, Mr. Hunt has leased 2,400 square feet to a recently opened bar and eatery, also named the Cedar Hotel. But the upper floors of the building, which used to be a transient hotel, remain empty.
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