Distressed retail center in Lincolnshire sold
(Crain’s) — A Denver firm paid $12 million for a bank-owned shopping center in north suburban Lincolnshire that fetched more than twice that amount at the market’s peak.
Baceline Investments LLC bought the Village Green center, a 121,000-square-foot retail and office complex anchored by a Flatlander’s microbrew restaurant, from Citigroup Inc. The center, at State Route 22 and Milwaukee Avenue, was built in 1996 and is less than 70% occupied.
The property couldn’t keep up with its mortgage payments because of the loss of a few tenants while some others stopped paying rent, says Ahron Shulman, whose Chicago-based firm Special Assets Acquisitions LLC paid $27.9 million for the center in June 2007. Mr. Shulman says the balance of the loan was $22 million in May when Special Assets handed the property back to Citi through a deed-in-lieu of foreclosure.
Baceline’s deal is another sign that the sales market is heating up after a long dormancy and may be a harbinger of things to come, says Jeff Baasch, a senior investment adviser with the Chicago office of Sperry Van Ness who represented the buyer.
“This is a foreshadowing of 2011,” Mr. Baasch says. “There’s going to be a significant number of banks getting these properties off their books next year.”
Baceline principal David Puchi didn’t return a call seeking comment, but the company says in a statement that the Village Green purchase is its third distressed-property acquisition since it began targeting such deals last year.
“We continue to see a number of small to mid-sized properties located in America’s Heartland with inherent value available at discounted prices,” Mr. Puchi says in the statement. “Village Green was a situation that not only offered great opportunity but one that allowed us to acquire property in one of the most prestigious neighborhoods in the Chicago metro area.”
The Village Green’s background is a colorful — albeit checkered — one.
Its developer, Forrest Laidley of Forrest Properties Inc., was sentenced in October to five years in prison on federal charges of defrauding investors. But there were problems many years earlier, and the Village Green wound up in bankruptcy in 2004 and was sold in a court-run auction for $22.2 million. That buyer later sold to Special Assets, which assumed the Citi loan.
Related story: Firm buys Lincolnshire property formerly in bankruptcy
A call to New York-based Citi wasn’t returned. The bank was represented in the sale by Arthur Burrows of NAI Hiffman, who couldn’t be reached for comment late Tuesday.
The sale, first reported in the Daily Herald, typifies the investment market’s Jekyll-and-Hyde nature, as the properties most in demand these days remain distressed ones — like the Village Green — and those that are well-located, well-leased and performing.
“The two ends of the spectrum are still very hot,” says George Good, an executive vice-president with CB Richard Ellis Inc. who specializes in retail property sales and wasn’t involved in the transaction.
Mr. Good says Village Green has struggled because it’s in an area better known for office space than retail. Also, he says, it’s just outside of a prominent restaurant row and close to a major retail hub in Vernon Hills.
“They probably didn’t have success attracting retailers away from Vernon Hills,” he says. “And there’s a lot of restaurant competition.”
