Oak Brook-based Inland Real Estate Corp. is being sued for not paying on mortgage loans worth more than $109 million on the Algonquin Commons shopping center along Randall Road.
U.S. Bank N.A. filed the foreclosure lawsuit on Dec. 28 in Kane County Circuit Court seeking repayment of two loans provided to Inland in 2004. The next court date is Feb. 1, according to court documents.
The first loan was for $77.3 million, but payments stopped around June 2012, according to the lawsuit. The remaining principle of $71.6 million ballooned to $86.9 million with added interest, fees and penalties.
The second loan was for $21 million, but again payments stopped around June 2012, the lawsuit stated. The remaining principle of $18.6 million also increase to $22.5 million with interest, fees and penalties, the suit said.
A Chicago attorney representing Minneapolis-based U.S. Bank declined to comment. A U.S. Bank spokeswoman said it was acting as a servicer on the loans for C-III Asset Management in New York. C-III spokesman Trevor Gibbons declined to comment.
A U.S. Securities and Exchange Commission filing by Inland said it stopped payments in June 2012 “because it believed it was the only way to initiate discussions with a special servicer to restructure the loans.”
The filing said Inland hopes to reach an agreement with the servicer that would revise the loan structure to make continued ownership of the property economically feasible, the document said.
Inland cited ongoing vacancies and certain cotenancy leases that allowed some tenants to reduce their monthly rents, the filing said.
“In December, the special servicer attempted to sell the loans in an auction, in which it refused to accept the company's (Inland's) high bid and declined to sell the notes to any other bidder,” the filing said.
Inland spokesman Joel Cunningham declined to provide further comment.
Algonquin Commons offers about 564,000 square feet of mixed shopping, restaurants and entertainment with the consumer's median age of 35. It offers national, regional and local stores, including Trader Joe's, Zales, Jared, American Eagle Outfitter, Biaggi's Restaurant and others, according to Inland's demographic overview.
The Algonquin Commons “is one of the better lifestyle centers in the Chicago area,” said John Melaniphy Sr., principal and retail analyst with Melaniphy & Associates in Chicago.
“The center is a victim of the recession, like many other shopping areas, but the consumer won't notice anything going on during the foreclosure case,” he said.
Melaniphy said Inland is a strong company and he expects it will try to renegotiate its loans.
The Algonquin Commons isn't the only shopping center going through foreclosure.
The investment firms behind the Arlington Town Square shopping center in Arlington Heights was sued for nearly $20 million in a foreclosure lawsuit in 2010.
Also, the companies and investors behind the Arboretum of South Barrington faced a foreclosure lawsuit in 2011 for owing about $91 million.
ŸDaily Herald Staff Writer Harry Hitzeman contributed to this report.Copyright © 2013 Paddock Publications, Inc. All rights reserved.