ALGONQUIN – Algonquin Commons, one of the commercial jewels along the busy Randall Road retail corridor, is facing a $109.53 million foreclosure lawsuit.
Another shopping center in nearby Lake in the Hills is also in foreclosure. However, local shoppers are unlikely to see stores close as the suits go forward.
U.S. Bank National Association filed a foreclosure suit in Kane County Circuit Court on Dec. 28 against Inland Real Estate Corp.’s Algonquin Commons property, according to court records and Security and Exchange Commission filings.
Inland Real Estate stopped making mortgage payments on the 563,704-square-foot outdoor shopping center at 1900 S. Randall Road last June in an effort to convince its lender to restructure loan payments.
In response, U.S. Bank filed for foreclosure. Crain’s Chicago Business called it “one of the largest foreclosure cases filed in the Chicago area since the crash.”
“The property has not been generating sufficient cash flow to pay both principal and interest on the outstanding mortgage,” the company said in an SEC filing this month.
It cited vacancies and lease provisions that allowed some tenants to reduce their monthly rents. Inland Real Estate Corp. declined further comment on the case, said spokesman Joel Cunningham.
Algonquin village officials are following the case carefully, said Community Development Director Russ Farnum.
“We are concerned about the future of the shopping center in the long-term,” he said. “In the short-term, nothing should change. The stores have leases that allow them to be there and be open for business.” Other Randall Road shopping centers have also faced financial difficulties.
In neighboring Lake in the Hills, the LITH Shopping Center, which includes the Dominick’s building at 101 N. Randall Road and a multi-tenant commercial building at 293 N. Randall Road, was part of a $17.9 million foreclosure suit filed in early 2012.
A foreclosure judgment was entered Dec. 20, 2012. The property is to be sold Feb. 14, according to the McHenry County Sheriff’s Office Civil Process Bureau.
In the LITH Shopping Center suit, a property management company wrote in a report to the court that
“this particular area of Randall Road has been over built with retail and has a considerable amount of vacant stores. In order to successfully lease in this corridor ... significantly lower rental rates compared to existing tenants might be required.”
Lake in the Hills officials have “monitored the foreclosure proceedings for the locations and will continue to do that in the future and hope a new owner will emerge,” said Dan Olson, the village’s community development director.
Despite these high-profile foreclosure cases, Randall Road remains a strong commercial corridor, said Mike Deacon, of RVG Commercial Realty.
“This will have no affect on Randall Road,” he said. “This is part of what happens behind the scenes.”
With the recession, rental prices have dropped along Randall Road and put pressure on property owners, Deacon said.
The importance of Randall Road was underscored recently by Brian Wesbury, chief economist at First Trust Advisors in Wheaton, during a speech he gave at a Home State Bank luncheon.
Asked if America’s middle class had disappeared, Wesbury pointed to Randall Road.
“You may be immune to it, but there’s anything you want to buy in the whole wide world on Randall Road,” he said. “Randall Road would not exist if there was no middle class.”