Luxury car dealer files to foreclose on rival
(Crain's) — Joe Perillo Sr. is turning into a vulture investor amid the shakeout in the auto sales industry, filing a $6.6-million foreclosure suit on a prime site owned by rival luxury car dealer Joe Abbas in the former Montgomery Ward & Co. complex.
The property, the south end of an 800-car garage that fronts Chicago Avenue and stretches north along Larrabee Street, was acquired in 2007 by Mr. Abbas, who at the time was expanding his own rapidly growing business, Luxury Motors Inc.
Mr. Abbas planned to place a showy facade on the building, with the showroom and service area taking up about 40,000 square feet. The entrepreneur's plan included moving a River North Infiniti dealership he once controlled to the site.
Amid a widespread downturn in auto sales, Mr. Abbas has been particularly hard hit. He recently sold off his locations on the Gold Coast and Downers Grove to Mr. Perillo, whose company has a Lincoln-Mercury-Saab dealership at 1111 W. Diversey Parkway and a BMW dealership at 1035 N. Clark St.
Mr. Abbas, who has previously said he wants to get out of the auto business, did not return calls requesting comment.
Related story: BMW dealer buying 2 local Bentley franchises
The move by Mr. Perillo is another example of the consolidation sweeping through auto sales industry. On the one hand, American manufacturers earlier this year canceled agreements with many longtime dealerships, reducing the amount of competition.
Meanwhile, better-established dealers have begun snapping up at a bargain dealerships that have been struggling because of the recession.
"You will see the bigger, stronger dealers get bigger," says David Justh, an executive vice-president with CB Richard Ellis Inc. based in Oak Brook who focuses on auto dealerships.
Manufacturers "gravitate toward the better operators, because part of being a good operator is being reasonably well-capitalized," he says.
Before filing suit, Mr. Perillo personally bought two loans on the property, 530 W. Chicago Ave., totaling $8.3 million, from MB Financial Bank. How much of a discount, if any, Mr. Perillo got on the notes could not be determined.
The loans, issued in 2007 and 2008, are roughly equal to the price a venture owned by Mr. Abbas paid when he bought the site from developer Centrum Properties Inc., property records show.
Mr. Perillo has eyed the site for some time but thought Mr. Abbas had paid too much for the property, which is just west of River North and the Gold Coast, a person familiar with Mr. Perillo's interest in it said.
Mr. Perillo did not return a call.
The foreclosure suit alleges that just one of the two loans, a $6.6-million first mortgage, is in default for failure to pay property taxes. The amount of the unpaid taxes due this year totals nearly $104,000, according to the Cook County Treasurer's Web site.
Mr. Perillo has offered to take title to the property in exchange for writing off all the debt, a step known as deed in lieu of foreclosure, according to the complaint.
