Metropolitan Square in Des Plaines under threat of foreclosure

The crown jewel of Des Plaines' downtown redevelopment, Metropolitan Square, is under threat of foreclosure after repeated defaults on a $17.6 million bank loan.

The owner of the mixed-use retail, office and residential development north of Miner Street near Northwest Highway and Lee Street, is 60 days behind on loan payments, said Mike Neises, property manager and owner of NEI Management & Development.

“Right now, we are working with the bank trying to work out some agreement with the financing,” said Neises, whose company makes loan payments on behalf of the property's current owner, the Schwinge Family L.P. “We are trying for a loan modification. We are making (payments) as we can, as the property can afford to.”

While the loan is in default, the lender, CW Capital Markets, has not started foreclosure proceedings, Neises said.

Metropolitan Square, which opened in 2006, features 135 condominiums and lofts and 121,383 square feet of retail and office space, according to Bloomberg and real estate data provider CoStar Group Inc.

The shopping center is anchored by the Shop-N-Save grocery store, which covers a third of the total retail square footage.

The city spent $20.8 million toward the $90 million project, including $7 million to build a 471-unit parking garage, which it still owns.

Schwinge Family L.P. bought Metropolitan Square in 2007 for $12.5 million from DBSI Group of Boise, Idaho, and assumed the $17.6-million loan, according to Crain's Chicago Business.

Rising rents may have contributed to the property's high vacancy rate — 25 percent for commercial and 15 of the residential units. Operating expenses have increased and the property's yearly net cash flow of under $655,000 is short of its debt service of more than $1 million, according to a recent report from Bloomberg L.P.

Prominent businesses to fold include Coldstone Creamery and Cheeseburger in Paradise, which shuttered its doors in March blaming high rent for its demise.