Chicago mayor wants $75M from casino winner as choice nears
Chicago Mayor Lori Lightfoot raised the stakes on the city’s casino bidders. The city is seeking $75 million from the winner selected from the three finalists, or a commitment to pay $40 million up front and $2 million a year later, Crain’s reported, citing unidentified people close to the matter. Hard Rock, Bally’s and Rush Gaming pitched the final three plans after Lightfoot’s office tossed out alternative proposals by Bally’s and Rush that would have placed a casino at or near the McCormick Place convention centers. Bally’s, which had already offered the city $25 million up front if it’s selected, is targeting the Tribune Publishing Center in River West. Rush is eyeing putting one of its Rivers-branded casinos at The 78 in the South Loop, while Hard Rock is looking at the proposed One Central development on the Near South Side. The mayor’s proposal to charge the winner tens of millions is the latest hurdle to overcome in the city’s yearslong plans for a casino Lightfoot says could generate city tax revenue of $200 million annually and relieve taxpayers from big police and fire pension obligations. Aldermen and residents in wards in or near the finalists’ sites have come out against a casino development in their back yards, and some officials have wondered whether they could revive the scrapped McCormick Place proposals. Alderman Tom Tunney, of the 44th Ward and chairman of the Chicago Casino Committee, is aiming for the final selection within the next month, and to seek approval from the Illinois Gaming Board by the fall, the Chicago Tribune reported. Community meetings for each of the three finalist sites yielded overwhelmingly negative comments. Alderman Brendan Reilly of the 42nd Ward, which includes River North, objects to the Bally’s Tribune proposal adjacent to his ward, which includes River North. He cited an April survey by the River North Residents Association that found 86 percent of almost 2,000 respondents were opposed to the casino, according to the Tribune. Reilly has also taken issue with news that the city only charged one $300,000 application fee to the Bally’s ownership group for both its proposals, including the dismissed one near the McCormick Place campus, while charging two distinct fees for the Rush Gaming Rivers proposals, one at each of the sites it eyed. Lightfoot’s administration said the application fees were handled differently because Bally’s ownership group for each of its casino sites would have been the same, while the Rivers brand was going to be used by separate owners for the casino components at The 78 development by Related Midwest and the tossed McCormick Place proposal by another owner. “We’re the only bidder that’s offering $25 million (to the city) upfront to build the project,” Bally’s CEO Soo Kim told the Tribune Friday. “We paid the fees that were asked. Don’t you think we would have sent another $300,000 if they asked us to?” Kim has also said he plans to eliminate an option within the casino contract to buy out minority investors; the city has required at least 25 percent minority investment in the casino. Bally’s is a few weeks away from releasing its revised minority investment program, which has $200 million in commitments from more than 200 investors, the Tribune reported.
Paraiso Bayviews condo owner sues mortgage firm owned by broker featured on “Million Dollar Listing Miami”
A unit owner at Paraiso Bayviews is accusing a mortgage company owned by a semi-celebrity Miami broker and Miami-based Devstar Group of attempting to force her into paying $100,000 in illegal late fees for falling behind on her payments, according to a recently filed lawsuit. Paraiso Ocean LLC, a company owned by Veronica Aguilar Garrido, is suing International Mortgage Capital Fund I in Miami-Dade Circuit Court for breach of contract, fraud and deceptive practices. It’s an attempt to stop the foreclosure sale of unit 307 in the 44-story tower at 501 Northeast 31st Street. Garrido’s entity bought the studio for $560,900 in 2018, records show. Last month, a Miami-Dade judge granted a $519,292 foreclosure judgment in favor of International Mortgage Capital Fund I. An auction sale is scheduled for April 18. Corporate records show the mortgage company is owned by Devstar principals George Helmstetter and Anthony Burns, as well as Michael Internoscia, a real estate agent and mortgage broker who was featured in a 2014 episode of Bravo TV’s “Million Dollar Listing Miami.” M&M Private Lending Group, another company owned by Internoscia, is also named as a defendant in Garrido’ entity’s lawsuit. Garrido claims she fell behind on her mortgage payments due to financial woes as a result of the Covid-19 pandemic, the complaint states. Internoscia told The Real Deal that Garrido’s entity’s lawsuit is completely inaccurate. “When people default on a mortgage, they hire attorneys to come up with every possible excuse,” Internoscia said. “The foreclosure was filed way before Covid even started. We tried to resolve this matter six or seven different times.” Internoscia referred further questions to Brian Kopelowitz, the lawyer for International Mortgage Capital Fund I. Kopelowitz did not respond to a phone message and an email seeking comment. According to the March 2020 foreclosure lawsuit, M&M Private Lending Group provided Garrido’s Paraiso Ocean with a $360,685 loan in 2018. The proceeds were used to finance the purchase of the 1,069-square-foot studio at the 386-unit condo building in Miami’s Edgewater neighborhood. M&M transferred the loan to International Mortgage Capital Fund I, and Garrido’s Paraiso Ocean defaulted on the mortgage when it stopped making payments in August 2019, the complaint states. Garrido’s Paraiso Ocean complaint, filed in January, alleges Garrido fell behind on her payments as a result of the pandemic. “However, plaintiff took all available precautions and steps to attempt to mitigate this matter, but International Mortgage Capital Fund I would not budge,” the lawsuit states. “When Plaintiff was ready to make her payments and make due on her arrearage, International Mortgage Capital Fund I requested an additional $100,000.00 in penalties in order to reinstate the note.” The $100,000 request violates state law, Garrido’s Paraiso Ocean alleges. Garrido, who has lived in her Paraiso Bayviews studio since buying it, disputes Internoscia’s version of events. She said she did fall behind on her payments in 2019 after she was forced to leave the unit when a plumbing pipe broke and caused extensive damage to her condo. “I had to pay rent, the mortgage and the expenses to renovate my apartment,” she said. “Even with all that going on, I was able to bring all my payments current [in 2020].” Garrido, who said she has receipts for all her loan payments, including ones paid in cash, alleges that the lenders wanted her to sign a document reinstating the mortgage. It contained a clause that she would have to surrender the unit if she made another late payment, she said. “I refused to sign,” Garrido said. “They filed the foreclosure lawsuit right before everything shut down because of the pandemic.” Garrido, who is from Ecuador, said she found other irregularities from the moment she decided to purchase the studio. While she made a $250,000 down payment, she was unable to qualify for a conventional loan, Garrido said. “The idea was I would get this hard money loan from M&M and then refinance it down the road,” she said. “But they didn’t give me the mortgage documents until the day of the closing, and they rushed me to sign everything.” It wasn’t until the lenders started sending her default notices that she began to carefully read the terms of the agreement, which included a $400 a day penalty for every day a payment was late, and jacking up her interest rate to 18 percent once she fell behind, Garrido said. “They took advantage of me from the very beginning,” Garrido said. “They have it set up so they can do this to people legally.” Internoscia and Devstar have been in legal trouble before in connection with the latter’s co-development of Marina Palms Yacht Club and Residences, a luxury waterfront condominium in North Miami Beach. In 2018, real estate agent Yamile Espinosa and her brokerage Miami Grand Realty sued Internoscia, Marina Palms Realty, Marina Palms Residences North and Marina Palms Residences South for allegedly withholding payment of a $356,400 condo sales commission. The three companies are owned by Devstar Group and its development partner, The Plaza Group. In 2020, Espinosa dismissed the lawsuit voluntarily after reaching a confidential settlement with the defendants, according to court records.
Major CRE firms back away from Russia
UPDATED, March 8, 10:45 a.m.: Commercial real estate firms have joined the mass of companies suspending operations in Russia following Vladimir Putin’s invasion of Ukraine. Knight Frank and Savills have suspended operations in the country, Bisnow reported. The firms could be only the first of the commercial real estate industry’s retreat from the country, as all five of the companies contacted by the outlet were at least planning to close offices or cut business relations. “With immediate effect, and with their agreement, we have suspended the commercial arrangements with our independent licensee in Russia,” a Knight Frank spokesperson told Bisnow. The company has been operating in Russia for two decades, employing about 260 people in the country. Savills also suspended a franchise agreement in the country, according to Bisnow, vowing not to do business with sanctioned persons or entities moving forward. Colliers and Avison Young both told Bisnow they are evaluating operations in the country, particularly in light of growing sanctions; Colliers has since announced it would discontinue operations in both Russia and Belarus. JLL told the outlet staying abreast of the situation abroad. Global real estate investment firm Hines is also considering its options in Russia, Bisnow previously reported. The company has about $1.5 billion of assets under management in the country, roughly 2 percent of its portfolio. A wide variety of companies have paused operations in Russia as international sanctions and reactions from major international businesses pile up. About 120 stores in Russia controlled by luxury giant LVMH, including Moët, Hennessy, Louis Vuitton and Hermès, have been temporarily closed. Ikea, H&M Group and Nike have said they would stop sales and close stores. Other companies retreating from Russia since the start of the invasion include oil companies Shell, BP, and Exxon Mobil; shipping companies FedEx and UPS; and tech companies Apple, Dell, Microsoft, Airbnb, and Google. Movie studios including Walt Disney, Warner Bros., Sony, Paramount, and Universal are stopping film releases in Russia as well. This article has been updated with Colliers’ ceasing of operations in Russia and Belarus.
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