AIM Realty Group Chicago’s Blog

(Crain’s) — The chairman and CEO of real estate auction and brokerage firm Sheldon Good & Co. was found dead Monday in Kane County in an apparent suicide.

The body of Steven L. Good was found Monday morning in a red Jaguar in a parking lot at the Max McGraw wildlife preserve in unincorporated East Dundee, according to the Kane County Sheriff’s Department.

Mr. Good, who was 52, had an “apparent self-inflicted gunshot wound,” according to a release from the sheriff’s department, which said no note was found.

The release said it was unknown how long Mr. Good had been at the preserve before he was found and that an autopsy had been set for Monday afternoon. A maintenance worker found Mr. Good.

Mr. Good, who lived in north suburban Highland Park, had previously worked for the U.S. Senate, the U.S. Department of Justice and the Cook County State’s Attorney’s office, according to a biography on Chicago-based Sheldon Good & Co.’s Web site. He had a bachelor’s degree from Syracuse University and a law degree from DePaul University, according to the site.

A call to Sheldon Good & Co. was not returned.

Steven Good was a prominent figure on the Chicago real estate scene, serving as president of the Chicago Assn. of Realtors earlier this decade. Like other real estate auctioneers, he relied heavily on newspaper advertising to promote the business his father, Sheldon Good, started in 1965.

“He was a fair competitor, and he’ll really be missed as an icon in the auction industry,” says Frank Diliberto, managing director and head of real estate auctions for KPMG Corporate Finance LLC. Mr. Diliberto worked at Sheldon Good for more than 11 years.

Steven Good joined the business in the late 1970s, but the father and son had a falling out several years ago as they tried to negotiate a plan for Steven to take over the business. After selling his controlling stake in the company to his son in 2001, the elder Good filed a lawsuit in 2002 accusing Steven and the firm of a litany of transgressions, from denying him commissions to not showing him the “honor and respect” appropriate for a chairman emeritus.

Related story: Good clan’s bad turn

A Cook County Circuit Court judge ruled against Sheldon Good, a decision that was upheld by the Illinois Appellate Court in December 2005.

Our hearts and prayers go out to the Good family.

AIM Realty Group Chicago

(Reuters) — Starwood Hotels & Resorts Worldwide Inc. signed a confidentiality agreement with property magnate Sam Zell’s Equity Group Investments LLC, according to a regulatory filing, sending its shares sharply higher.

Such a move could be in preparation for Zell’s firm taking a greater stake in Starwood, an analyst said, but no such intention was mentioned in the filing with the U.S. Securities and Exchange Commission on Wednesday.

Equity Group Investments already owns 14.75 million Starwood shares, according to the filing, or about 8 percent of Starwood’s outstanding shares, according to Reuters data.

Starwood’s shares were up $2.65, or 14.8 percent, at $20.55 on the New York Stock Exchange late Friday morning.

The hotel company’s shares have plunged more than 70 percent over the past 18 months, as the economic slowdown punctured the travel spending boom. The stock hit its lowest point in more than 10 years in November.

Talk of consolidation in the lodging sector has been rife in recent months as hotel companies’ prospects have become uncertain, and their valuations have hit longtime lows.

The market value of Starwood — which operates the W, Sheraton and St. Regis hotel brands — is now around $3.8 billion.

“We are seeing speculative buying in the January (Starwood) calls as investors position for more gains in Starwood Hotels’ shares,” said Joe Kinahan, chief derivatives strategist at online brokerage thinkorswim Group in Chicago.

“The catalyst appears to be the Sam Zell news this morning. His Equity Group has signed a confidentiality agreement with Starwood Hotels, which is often a precursor to a merger or an acquisition. People want to follow the smart money and Zell is a very respected investor.”

“With this large commitment by Zell’s Equity Group Investments, investors obviously believe they will eventually do something to enhance shareholder value,” said William Lefkowitz, option strategist at brokerage firm vFinance Investments.

The confidentiality agreement will “facilitate the sharing of information” between Starwood and Zell’s Equity Group, according to the filing, but did not specify the purpose.

“We are delighted that you are showing such confidence in the company,” Starwood wrote to Equity Group, in a letter appended to the filing. “We agree to make available to you … certain confidential information about the company,” relating to Starwood’s operations and assets, the letter said.

AIM Realty Group Chicago

(AP) — A closely watched index shows home prices dropped by the sharpest annual rate on record in October, but Chicago-area prices didn’t fall as much.

The Standard & Poor’s/Case-Shiller 20-city housing index released Tuesday fell by a record 18 percent from October last year, the largest drop since its inception in 2000. The 10-city index tumbled 19.1 percent, its biggest decline in its 21-year history.

Chicago-area prices fell 10.8 percent in October compared with October 2007, according to the S&P/Case-Shiller numbers. October prices were down 1.6 percent compared with September.

Both the 20-city and 10-city indices have recorded year-over-year declines for 22 straight months. Prices are at levels not seen since March 2004.

Prices in the 20-city index have plummeted more than 23.4 percent from their peak in July 2006. The 10-city index has fallen 25 percent since its peak in June 2006.

None of the 20 cities saw annual price gains in October — for the seventh consecutive month.

AIM Realty Group Chicago

Falling interest rates are leading to a rush to get cheaper mortgages. Should you join in?

NEW YORK (CNNMoney.com) — Falling interest rates are fueling a mortgage refinance frenzy as homeowners rush to reduce their housing payments.

The average rate for a 30-year, fixed mortgage dropped to 5.08% last week, according to the Mortgage Bankers Association, more than a full point lower than just a month ago.

Mortgage applications were up a whopping 48% last week, according to the MBA and more than 80% were from homeowners looking to lower housing costs.

“It’s snowing loans,” said Steve Habetz, a Connecticut mortgage broker, “and they’re all refis.”

Among those were Elizabeth Mayer and Michael Keohane, who bought their Manhattan condo just a little over a year ago, financing $220,000 of the purchase price with a 30-year, fixed rate loan of 6.5%. That was affordable, with monthly payments of less than $1,400. But their new 5.25% loan will lower their payment to about $1,215, saving about $175 a month.

“It was a nice holiday gift,” said Mayer.

With savings like that, it’s no wonder that homeowners are coming out of the woodwork. And mortgage brokers are beating the drums too, advising their clients to let the good times roll.

Mayer said her mortgage broker had kept her informed of interest rate declines ever since she originally purchased her home. “He’s been encouraging whenever opportunities arose,” she said. “We missed one opportunity last spring when we just weren’t able to act on it.”

The broker made sure they didn’t miss this chance. “He e-mailed me [about it] from South Africa and called when he got back,” said Mayer.

Who should refi…

Anyone with high adjustable-rate loans. Folks in this group should try to get into a low fixed rate if they can. Not only will they lower their payments immediately but it would also eliminate the possibility of future increases.

Those who would lower their rate by a percentage point or more. Borrowers who already have a reasonable fixed rate shouldn’t jump into a new loan every time rates inch down, according to Orawin Velz, an economist for the Mortgage Bankers Association.

“You should have at least a percentage point difference before you even think about it,” Velz said. “If you have a 6.5% loan right now, it would be a great time to refi.”

Waiting for a substantial rate decrease makes sense because getting a new mortgage incurs some expenses. There are the costs of a new appraisal and origination and application fees. Plus, a title search and title insurance are usually required.

All those costs, which can add up to $2,000 or $3,000 or more for a typical $200,000 loan, are often rolled back into the mortgage, increasing the principal upon which the interest rates are applied. If that goes up so much that it offsets the interest rate drop, it doesn’t make sense to refi.

Those who are planning to stay in their homes for a while. The increased balances usually take a year or two to be wiped out by lower monthly payments, so anyone planning to sell the home during the next few years probably should not refinance, unless the difference in interest rates is very substantial.

The actual rate borrowers get depends, just as with purchase mortgages, on credit scores, income and assets and the value of the home.

“If you have a high credit score and your equity is good, it’s like a vanilla cream puff,” said Velz. “You’re going to get a great rate.”

Borrowers with significant equity in their homes. Many homeowners have had much of their home values erased in the post-bubble bust, eliminating much or all of their home equity - the difference between the value of the home and the amount owed on the mortgage.

If a refi borrower’s home equity has fallen below 20% of the total appraised home value, the borrower will likely have to purchase private mortgage insurance. The insurance adds a point or two to the monthly mortgage costs, which turns a 5% loan into a 6% or 7% loan, erasing any advantage of refinancing.

“That’s the biggest hurdle for refinancing right now,” said Velz.

Borrowers who don’t think rates will decline much further. Everyone considering refis has to decide whether to wait for interest rates to go even lower, which the Mortgage Bankers Association has been forecasting.

That’s only a prediction, though, not a certainty. Rates could turn higher instead.

Borrowers must weigh the advantages of gambling on rates turning around or locking in savings at the present very low rates.

AIM Realty Group Chicago

(Crain’s) — A California venture has defaulted on a more than $87-million construction loan used to finance the redevelopment of the seven Illinois Tollway oases, a lender on the project disclosed last week.

The default is another black eye for Wilton Partners Tollway LLC, which has been plagued by controversy since its selection as rest-stop developer in 2002. Questions surfaced about contributions worth $85,000 to Gov. Rod Blagojevich and the firm’s agreement to lease space in the oases to restaurants owned by associates of Antoin “Tony” Rezko, a Blagojevich confidant convicted earlier this year of federal criminal charges.

The O’Hare Oasis on the Tri-State Tollway. Photo from the Illinois Tollway.

Wilton Partners Tollway is an affiliate of Los Angeles-based Wilton Partners LLC, whose founder, Jay Wilton, did not return calls Tuesday requesting comment. The default could be particularly costly to Mr. Wilton because he is listed as a guarantor of the loans, according to property documents, meaning he could be personally liable for a default.

The construction loan default was disclosed Dec. 18 by Acadia Realty Trust, which separately holds a $3-million mezzanine loan, similar to a second mortgage, for the $94-million project. As a result, White Plains, N.Y.-based Acadia said it was writing off its loan and the unpaid interest, a total of $4.4 million.

The construction loan is held by New York-based finance company iStar Financial Inc., property records show. iStar inherited it as part of its acquisition last year of the commercial real estate lending business of California-based Fremont Investment & Loan, which made the original loan in 2004.

“As a result of economic conditions, including the current disruption in the credit markets, the owner (Wilton Partners Tollway) has experienced difficulty in stabilizing and refinancing the project,” Acadia said in a news release.

But Wilton’s woes began well before the current crisis. Wilton has a long-term lease with the Illinois State Toll Highway Authority for the retail space in the seven Chicago-area rest stops, which total 110,000 square feet. Nearly a year ago, the vacancy rate was about 45%.

Related story: Oasis money drying up for tollway; New leasing agent hired after concessions fall

Wilton stopped making regular rent payments to the tollway for two years beginning in February 2006. The company still owes about $1.3 million in back rent, but has been current in its payments since February, a spokesman for the agency says. Wilton and the agency are in mediation over $500,000 the agency paid for parking lot repairs it says are Wilton’s responsibility.

Next year, the minimum rent is nearly $704,000, according to the 2007 annual financial report for the tollway, which has set aside nearly $682,000 to offset unpaid 2007 rent.

The tollway spokesman declined to comment about the status of Wilton’s loans, saying it didn’t involve the agency.

“The endgame . . . for us has always been to provide the services,” the spokesman says, noting amenities such as high-speed Internet connections and restaurants. “They invested about $100 million that we would not have done, at no cost to the tollway or the users.”

Late last year, Wilton Partners Tollway defaulted on the $82.8-million balance on the iStar loan when it was unable to refinance the debt when it came due, according to a Feb. 12 amendment to the original mortgage. As part of a loan restructuring, iStar agreed to add unpaid interest to the balance — making the total $87.1 million — and extend the maturity date until June 30, 2009.

The reasons for the current default could not be determined. Acadia, iStar and Wilton have already held unsuccessful discussions about a debt restructuring and capital infusion, Acadia said.

AIM Realty Group Chicago

(Crain’s) — Home sales in the Chicago area fell by nearly a third in November, according to the Illinois Assn. of Realtors.

In the nine-county Chicago region, 3,910 single-family homes and condominiums were sold last month, a decrease of 32.3% compared with 5,774 in November 2007, the Realtors’ group said in a release Tuesday.

In the city of Chicago, sales fell 41.3% in November, to 1,057 compared with 1,801 in November 2007.

“The housing market was stalled in November due to a deepening recession, which hit our economy with blunt force this fall. No one should be surprised at these figures given what happened with the financial markets in the past few months,” Pat Callan, president of the Illinois Assn. of Realtors and broker-owner of Realty Executives Premiere in Wheaton, said in the release. “Looking ahead, we are encouraged by the Federal Reserve Board’s action last week to get our economy moving again with the announcement to lower the federal funds rate.”

The median sale price in the Chicago area was $207,745 in November, a decrease of 15.9% from $247,000 in the same period last year, the Realtors’ group said.

The median price in the city of Chicago was $222,500 in November, a decrease of 23.3% compared with $290,000 in October 2007.

The median is the price where half the homes sold for more and half sold for less.

“The combination of lower mortgage interest rates and a major infrastructure investment program that is anticipated from the Obama administration offer the best hope for some turnaround in the housing market in the next year,” Geoffrey J. D. Hewings, director of the Regional Economics Applications Laboratory of the University of Illinois, said in the release. “Of concern, Illinois forecasts for the next 12 months suggest job declines of the order of 50,000 to 55,000.”

Chicago-area home sales are down 26.5% from January through November compared with the same period in 2007.

Statewide sales fell 33.9% in November, to 6,076, compared with 9,191 in November 2007, the Realtors’ group said. Statewide sales fell 24.1% from January through November compared with the same period last year.

The median sale price statewide in November was $165,000, a decrease of 13.2% compared with $190,000 in November 2007.

The Realtors group’s sales figures include new and existing homes. The nine-county Chicago Primary Metropolitan Statistical Area consists of Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will.

Meanwhile, sales nationwide of existing homes plunged far more than expected last month as buyers recoiled from October’s financial wreckage on Wall Street. The median sales price fell by the largest amount on record.

The National Assn. of Realtors said Tuesday that existing-home sales fell 8.6% to an annual rate of 4.49 million in November, from a downwardly revised pace of 4.91 million in October.

Sales had been expected to fall to a pace of 4.9 million units, according to Thomson Reuters.

The median sales price in the U.S. plunged 13.2% in November to $181,300, from $208,000 a year ago. That was the lowest price since February 2004, the biggest year-over-year drop on records going back to 1968 and most likely the biggest drop since the Great Depression.

Nationally, the Realtors group estimates that sales of distressed properties made up 45% of all property sales in November.

AIM Realty Group Chicago

(Crain’s) — The Illinois Gaming Board on Monday awarded its 10th gambling license to Midwest Gaming LLC of Des Plaines over bids from investor groups in Waukegan and Rosemont.

The five-member board voted 3-1. Board member Eugene Winkler declined to vote, saying he found all the finalists unacceptable. Member Joe Moore favored Waukegan, saying that the north suburban community best met the state’s intent to award the license to an economically struggling community that needed the jobs and real estate development generated by a casino.

But three other board members said Chicago developer Neil G. Bluhm’s Midwest Gaming offered both the largest and longest development strategy of the three proposals. They also cited character issues with principals involved in both the Waukegan and Rosemont plans, even though their bids were greater than Mr. Bluhm’s.

“We’re obviously grateful the board chose our proposal,” said Greg Carlin, CEO of Midwest Gaming. “We think it’s the best proposal for the state.”

Midwest proposed $704 million worth of investments at its site at River Road and Devon Avenue that will include a casino, four restaurants and a parking garage for 1,875 vehicles. Later phases of the project also would include a 10,000-square-foot night club.

Midwest pledged to pay $125 million upfront for the license, an increase from the $100 million it offered in October, but still less than the $225 million offered by the investor team in Waukegan and the $435 million from Trilliant Gaming in Rosemont.

Midwest also agreed to pay the state $10 million a year for 30 years, in addition to the state taxes paid on the casino’s gross receipts. Midwest also will share casino revenue with needy suburban communities.

“The upfront bid carries less weight than the overall project,” said board member James Sullivan, who voted for Midwest along with board Chairman Aaron Jaffe and member Charles Gardner.

In lengthy explanations of their votes, board members voiced a wide range of concerns and complaints about all the applicants — none more so than with the Rosemont proposal from Trilliant, a company started by Canadian private-equity firm Onex Corp. and headed by former MGM Mirage Inc. President Alex Yemenidjian.

Allegation of organized crime influences in Rosemont prompted the gaming board to scuttle previous attempts to open a casino in the tiny northwest suburb. Board members said Monday they aren’t satisfied that the village is mob-free.

“Organized crime still controls much of the life of the village of Rosemont,” Mr. Winkler said.

Mr. Gardner added: “Rosemont is the least acceptable community. It’s tainted by its reputation and doesn’t support the needs test.” He also said Rosemont Mayor Bradley Stephens displayed the same “arrogance and contempt” for the board’s authority as did his father, the late Donald Stephens, longtime mayor of the town.

A spokesman for the village of Rosemont said town officials are disappointed with the gaming board’s decision.

“We will move forward with other developments,” he said.

A spokesman for Trilliant was not immediately available for comment.

Board members also took aim at investors in Waukegan Gaming LLC.

“Certain principals have questionable associations,” said Mr. Jaffe, who did not elaborate. Mr. Winkler said the presence of “some very shady characters” in the Waukegan team caused him not to support the proposal.

Among the original investors in the Waukegan group was Springfield political power broker William Cellini, who is facing federal charges alleging that he was involved in a scheme to force Hollywood movie producer Thomas Rosenberg to donate $1.5 million to Gov. Rod Blagojevich’s campaign fund in exchange for a state investment in Mr. Rosenberg’s company.

But Waukegan organizers have said Mr. Cellini sold his share of the project to Hinsdale builder Michael Pizzuto, who also is a trustee for the state university retirement system.

Waukegan Gaming declined to comment on board members’ comments.

State officials were counting on the sale of the license to pull in as much as $500 million to plug holes in the state budget. Reactivating the state’s 10th license has dragged on for a decade. The original owner, Chicago-based Emerald Casino Inc., closed its East Dubuque casino in 1998 and received legislative approval in 1999 to transfer it to a suburban Chicago location.

The gaming board blocked Emerald’s attempts to open a casino in Rosemont, ruling in 2001 that company executives had withheld information about investors with alleged ties to organized crime.

Emerald later filed for bankruptcy protection and in 2004 attempted to sell the license to St. Louis-based casino operator Isle of Capri for $518 million. Isle of Capri wanted to use the license for a casino in Rosemont, too. That deal was blocked by the state, and the gaming board eventually revoked Emerald’s license.

AIM Realty Group Chicago

First Industrial downgraded

Janney Montgomery Scott LLC cut its rating on First Industrial Realty Trust Inc. to “neutral” from “buy.” The real estate investment trust’s “balance sheet will allow the REIT to continue to function as a going concern. However, we expect investor apathy towards the stock to result in a languishing share price,” the Philadelphia-based firm said in a research note Friday. The downgrade comes after Chicago-based First Industrial this week announced the resignation of its chief financial officer along with more cost cuts, including discontinuing its operations in Europe. The company also again cut its 2008 full-year profit guidance. Meanwhile, Fitch Ratings said Thursday that it was maintaining its debt ratings on First Industrial but changing its outlook to negative from stable. Fitch said the change “centers on Fitch’s view that (First Industrial’s) overall earnings power is expected to be even weaker than previously anticipated in the near term, thus negatively impacting the company’s creditworthiness.”

Alcatel-Lucent division leases Lisle space

LGS Innovations LLC, which was the former government business units of Lucent and Alcatel, has leased about 22,000 square feet at 1600 Eisenhower Lane in Lisle for office and laboratory testing space. The suburban Washington, D.C.-based division of telecom giant Alcatel-Lucent in November signed a seven-year lease that begins in February, according to Mark Moran of Oakbrook Terrace-based NAI Hiffman, which represented the landlord, a private investment group. LGS, which works for the federal government, is now building out the space at 1600 Eisenhower, a one-story, 31,748-square-foot building constructed in 1989. The building, which is off Maple Avenue west of State Route 53 in west suburban Lisle, is now full, NAI Hiffman says. It is for sale with an asking price of about $4.6 million.

Burr Ridge mall gets salon, women’s retailer

Burr Ridge Village Center has two new tenants: Soft Surroundings, a women’s apparel and home goods retailer, and Salon Efthimia, an Aveda beauty salon offering haircuts and related services. The two leases bring the lifestyle center that opened in November 2007 in southwest suburban Burr Ridge to more than 70% leased, says Scott Rolston, a senior property manager with developer Opus North Corp. Soft Surroundings, which opened last month, has leased about 5,500 square feet while Salon Efthimia will occupy about 1,600 square feet when it opens in April, Mr. Rolston says. This is the second Chicago-area location for St. Louis-based Soft Surroundings, which also opened a store this year at the Arboretum of South Barrington lifestyle center.

Owner refinances Mundelein retail center

The owner of a Menards-anchored shopping center in Mundelein who plans to replace it with an upscale apartment complex has refinanced the property with a $6.3-million loan from Minneapolis-based life insurer Thrivent Financial for Lutherans. The new loan replaced about $5.7 million in debt on the 200,000-square-foot center Oak Creek Plaza, located on State Route 60 east of U.S. 45, said owner Ronald Boorstein, a Chicago-based real estate developer. Mr. Boorstein has presented concepts plans to the village but has yet to seek formal approval, says a village official. Construction of the first phase of the planned 694-unit complex could start in mid-2009, Mr. Boorstein said. Chicago-based Beacon Realty Capital arranged the refinancing.

AIM Realty Group Chicago

(Crain’s) — Developer Daniel Mahru, a former business partner of Antoin Rezko, has filed for personal protection from creditors, saying he has assets of $50,000 or less and debts of more than $10 million.

Mr. Mahru was CEO of Chicago-based Rezmar Corp., a development company he co-owned with Mr. Rezko, between 1989 and 2005. Mr. Rezko, who was Rezmar’s chairman and a former fundraiser for Gov. Rod Blagojevich, is awaiting sentencing on federal fraud charges.

In a bankruptcy petition filed last week in U.S. Bankruptcy Court in Chicago, Mr. Mahru does not list his debts, which the filing says are between $10 million and $50 million.

Mr. Mahru, who now has his own company, blamed Mr. Rezko for his financial troubles, saying Mr. Rezko has not lived up to the terms of a September 2005 buyout of Mr. Mahru’s stake in Rezmar.

“I’m forced into this position because of Mr. Rezko,” said Mr. Mahru, CEO of Chicago-based Radian Development LLC. The bankruptcy filing “is not my first choice, it’s my last choice,” he added.

As part of the buyout agreement, Mr. Rezko agreed to reimburse Mr. Mahru in connection with any Rezmar-related litigation, Mr. Mahru said. Mr. Rezko also agreed to pay a $2-million promissory note, Mr. Mahru said, and make an additional payment, which Mr. Mahru declined to disclose.

One of Mr. Rezko’s lawyers, Joseph Duffy of Chicago law firm Stetler & Duffy Ltd., declined to comment.

Rezmar began as an affordable-housing developer before undertaking larger townhouse and single-family home developments in Chicago. The firm’s most ambitious project was never built, a massive mixed-use development on a 62-acre site at Roosevelt Road and Clark Street.

There is little love between Messrs. Rezko and Mahru.

In December 2005, after Rezmar’s breakup, Mr. Mahru began cooperating with federal investigators against Mr. Rezko, according to a document filed by Mr. Rezko in one of his two criminal cases. Mr. Mahru ultimately was not called as a witness in Mr. Rezko’s case.

Mr. Mahru declined to comment about the investigation except to say, “I’ve had no discussions with the federal authorities in a very long time.”

Mr. Mahru’s bankruptcy petition comes as he says he faces collection efforts by creditors on several Rezmar ventures, including a 4.4-acre site in Sauganash on the Northwest Side, where nearly four years ago Rezmar planned to build 35 homes.

The plan collapsed, and Wisconsin-based lender M&I Marshall & Isley Bank last year obtained a judgment for about $13 million, property and court records show.

Mr. Mahru said creditors have obtained several other judgments against him in connection with Rezmar projects, which he declined to identify.

In March, National City Bank filed a $1.5-million foreclosure lawsuit on Mr. Mahru’s Glencoe home. Mr. Mahru says the case is in “limbo.”

AIM Realty Group Chicago