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Chicago Developer Faces Foreclosure Suit

by Chicago Agent

Developer William Senne faces a $6.4-million lawsuit over a business loan backed by 11 of his properties. First Midwest Bank N.A. filed a foreclosure lawsuit last month against a venture managed by Senne. First Midwest Bank N.A. is alleging the venture failed to pay off the business loan when it was due last August. Senne also faces foreclosure on an unbuilt 94-unit Bucktown condo project and has yet to sell out a 212-unit West Loop development.

According to Crain’s Chicago Real Estate Daily, the First Midwest suit is over a loan secured by retail stores in Promenade, a 78-unit condominium building that Senne’s Senco Properties built in the West Loop at 1201 W. Adams St., as well as 10 smaller residential and retail properties, according to the complaint.

Senne, the CEO of Senco, took out the loan in August 2005 from Westmont-based First DuPage Bank, which First Midwest took over after regulators shut down First DuPage in October 2009.

Senne’s lawyer, Joseph Palmisano, told the publication he hopes the two sides can reach a solution.

“All these lenders have pressure,” Palmisano says. “There are lots of small pieces there (the properties) … All of those are highly marketable.”

Senne put up 10 properties as collateral when the loan was made, including the retail in the Promenade, which was built in 2002. The other nine are 2118 N. Hoyne Ave., 1831 N. Marshfield Ave., 3439 W. Drummond Place, 2039 W. McLean Ave., 1927 N. Wolcott Ave., 1935 N. Damen Ave., 1655 W. Cortland St., 1448-1450 N. Leavitt St. and 1931 N. Hoyne Ave., according to First Midwest’s complaint.

According to Crain’s, after already modifying the payment terms of the loan twice, Senne added a final property as collateral, 2014 N. Wolcott Ave., to a third modification of the note in 2007, the complaint says.

Senne is also still involved in litigation over a project that never got off the ground, Crain’s says. EcoLogic Lofts, a proposed 94-unit “green” building that was to feature a rooftop garden, recycling stations and power-producing wind turbines, which would have been built at 2339-59 N. Seeley Ave. in Bucktown, was never able to obtain constructio financing. Wheatland Bank of Naperville filed a $6.8-million foreclosure lawsuit in 2009, after the developer defaulted on two loans.

However, Senco Properties partnered with another local developer, Harlem Irving Cos., to build the 12-story, a 212-unit West Loop condo  Emerald, built in 2007 at 123-125 S. Green St., using a $68-million construction loan from J. P. Morgan Chase Bank N.A.. The status of the construction loan could not be determined. A message left with an executive of Chicago-based Harlem Irving wasn’t returned.

As of the end of the second quarter, Emerald had closed on sales of 164 units, or 77% of the project, according to a report by Appraisal Research Counselors. Another 14 units were under contract to be sold at the end of the second quarter, Appraisal Research data shows.

Gail Lissner, vice-president of the Chicago-based consulting firm, says Emerald’s sales are about in line with the rest of the downtown condo market.

“It’s a very sluggish market,” Ms. Lissner says. “It (Emerald) is right there in the middle.”

Emerald also is renting some of its unsold units, according to a personal familiar with the building, which has become a common strategy for developers looking to generate income.

First Midwest seeks to collect the unpaid debt, plus interest, fees and other costs, according to a complaint filed July 8 in Cook County Circuit Court.

A spokesman for Itasca-based First Midwest didn’t return a message requesting comment. A lawyer representing the bank in the lawsuit also didn’t return a call.

Read more: http://www.chicagorealestatedaily.com/article/20110811/CRED0701/110819971/developer-bill-senne-faces-new-foreclosure-suit#ixzz1Up9RLk5d
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