Responding to threats that the FAO Schwarz store on Michigan Avenue might close if the rent is not reduced, the building’s landlord has filed suit against the former owner of the retail chain.
U.S. Equities Realty wants to collect on a promise by Royal Vendex KBB NV to guarantee rental payments from the Chicago store through January 2013.
Royal Vendex last month sold 23 of its 40 FAO stores nationwide to California-based Right Start Inc. for $43 million in stock and debt. Right Start said that it would not buy the Chicago store unless the building’s owner, a limited partnership led by U.S. Equities, cuts the rent.
The 30,000-square-foot store remains open, and the complaint filed Feb.1 in U.S. District Court in Chicago doesn’t allege that rent checks have stopped.
“We are working … to restructure the situation,” said Camille Julmy, vice chairman of U.S. Equities, who said the lawsuit was “only a necessary step in the legal system.”
Representatives of Royal Vendex and Right Start could not be reached for comment, but the court action could put pressure on Netherlands-based Royal Vendex to strike a deal with U.S. Equities.
The lawsuit alleges that if Royal Vendex, a leading European retailer that in its last fiscal year had net income of about $140 million, closes the store at 840 N. Michigan Ave., it would be on the hook for the lease.
The total rent, including taxes and operating expenses, over the remaining term of the lease exceeds $40 million
Boom in Bridgeport: Developer Thomas A. Snitzer already is thinking about expanding his single-family development along the Chicago River in Bridgeport, even before he formally starts marketing the project.
Bridgeport Village, a 17-acre development along the east bank of the river between 32nd and 34th Streets, is owned by a partnership that includes Snitzer, former advertising executive John J. Kinsella and toy- and candy-maker Sid Diamond of Flix Candy Inc. Financed with a $21 million construction loan from Bank of America, the project is intended to blend into the existing neighborhood, with three-bedroom homes starting in the $350,000 range.
The partnership has signed contracts with two trucking companies for about 15 acres across the river, sources said. Snitzer, president of Arlington Heights-based Snitzer Homes Inc., would not comment on the acquisition price, which sources said was nearly $4.7 million.
Snitzer isn’t the first residential developer to sign a contract for the land across the river, currently zoned for manufacturing.
Snitzer wouldn’t comment on plans to expand the residential project except to say, “We will work with city officials to evaluate options for the site.”
Gryphon lands first property: A seven-story office and apartment building in downtown Highland Park is the first acquisition for Gryphon Realty Capital Advisors LLC, a real estate investment firm whose partners include real estate executive E. Valjean Wheeler and two principals in real estate firm HI Group LLC: Douglas Cameron and James Abbey.
The $7.5 million deal, which took 10 months to complete, was complicated by several factors, including this fall’s tough financing market, said Wheeler, who has held top positions with the privately held predecessor to Equity Office Properties Trust and Beacon Properties Inc.
Chicago-based Gryphon–the unusual name is the Old English spelling of griffin, the mythical animal that is part eagle, part lion–is looking to buy office and apartment properties with strong cash flows, said Wheeler, “because that’s what I think it’s going to take to survive the next few years.”
Office building sold: Chicago-based real estate firm Millennium Properties Inc. represented Special Assets Inc. in the $3.25 million sale of a 12-story, terra cotta office building at 180 W. Washington. St. The buyer was an investment group that includes Robert Weitzman of Group One Investments.
