Lender Lehman Brothers Holdings Inc. is questioning B.J. Spathies’ handling of $3.6 million in connection with Prairie House, a Near South Side condominium project, according to a letter from the New York investment bank to the Chicago developer.
Spathies, the chief executive of Bejco Development Corp., declined to comment.
Home buyers would not be affected by any dispute between Spathies and Lehman, said Atlanta developer Norman Radow, who now handles the project. He declined to comment on the letter.
The “misappropriated deposits” include earnest money that some home buyers put down to secure sales contracts or pay for upgrades to units, Lehman Brothers executive David Broderick said in a March 10 letter seeking repayment.
Spathies’ “wrongful conduct” triggers a personal guaranty for Lehman’s debt, amounting to $17.8 million, the letter claims.
In December, Lehman took over the 187-unit project at 1501 S. Prairie Ave. after a default on a $9 million mezzanine loan. Lehman also paid off the construction loan.
Sears Tower financer: After a heated competition, the New York venture buying Sears Tower has selected Bank of America to finance the $840 million acquisition, turning the transaction into a heavily leveraged deal.
With an aggressive bid to provide as much as $825 million in financing, including a first mortgage and a mezzanine loan, the Charlotte, N.C.-based banking giant has edged out rival Wachovia Securities, which had been the front-runner, sources said.
Executives with the venture, which is led by Chetrit Group LLC and includes the Feil Organization, could not be reached for comment.
AECOM consolidates: Architectural and engineering giant AECOM Technology Corp. is consolidating its local offices at 303 E. Wacker Drive, expanding its space in the East Loop tower by 58 percent, to 117,000 square feet, said Thomas D’Arcy, a vice president with Houston-based Hines Interests LP, co-owner of the building.
AECOM’s Consoer Townsend Envirodyne (CTE) Engineers Inc. had 74,000 square feet under a lease that would have expired in 2006. The new deal runs until 2014 and allows another AECOM unit, McClier Corp., to move from 401 E. Illinois St. Real estate firm Cushman & Wakefield Inc. advised Los Angeles-based AECOM.
Kraft facility deal: In an opportunistic play, Indianapolis-based Duke Realty Corp. has signed a contract to buy a 300,000-square-foot distribution center in Northlake from Kraft Foods Inc. The deal includes an adjacent development site, boosting the price to about $38 a square foot, or $11.4 million, sources said.
Northfield-based Kraft is represented by Cushman & Wakefield.
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Near South foreclosure: CIB Bank has filed a foreclosure lawsuit on 1000 S. Michigan Ave., a parking lot that was the site of a proposed twin-tower condominium development by a venture that includes Guy Gardner, a member of the family that founded Soft Sheen Products Inc.
The venture’s $12.5 million loan came due on July 1, according to the complaint. In the same case, CIB alleges that two other Gardner loans, totaling nearly $4.2 million, are in default.
One of those loans was for a townhome project at 1334-46 S. Wabash Ave.
Downtown demand: Demand for downtown office space declined during the first quarter, but at a much slower pace compared with the fourth quarter, a sign the market is bumping along the bottom, according to a report by real estate firm CB Richard Ellis Inc.
“We’ve already fallen down the hill. Now we’ve got to dust ourselves off and climb back up,” said John Dempsey, senior vice president in the Chicago office of CB Richard Ellis.
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Downtown office market survey
Demand for downtown office space declined slightly during the first quarter, but showed improvement over the prior period.
VACANCY RATES
%%
SUB MARKET 4th Q 2003 1st Q 2004
West Loop 12.0% 12.1%
Central Loop 14.3% 14.0%
East Loop 13.4% 14.5%
N. Michigan Ave. 9.0% 9.2%
River North 28.5% 22.8%
Downtown Market Total 13.5% 13.4%
%%
DEMAND FOR SPACE*
%%
Class A buildings 66,599 241,730
Class B buildings -410,021 -143,294
Class C buildings -49,811 -118,442
Total -393,233 -20,006
%%
*As measured by net absorption, the change in the amount of leased and occupied space, compared to the prior quarter.
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Source: CB Richard Ellis Inc.