J
ohn Vander Zwaag's firm is facing a second office investment crisis in suburban Chicago. PNC Bank's Midland Loan Services has filed a $28 million foreclosure lawsuit against an affiliate of Pembroke IV, Vander Zwaag's landlord company, over debt tied to a 225,400-square-foot office campus in Lake Forest. The loan was issued by Money360 in 2021 with a $33 million balance.

    Pembroke had acquired the two-building campus in 2016 and used the loan to refinance one building and buy its twin for $12 million each. However, the buildings have struggled to attract tenants, with over 55,000 square feet of office space available at each location. This is despite a regional vacancy rate of 31% as of the third quarter.

    Midland has asked the court to appoint a receiver for the property if Pembroke fails to pay off the debt. A hearing on this motion is set for Friday. The lawsuit claims that Pembroke missed its monthly debt service payment in June and failed to pay off the loan in full by its July maturity date, leaving a remaining balance of $28 million.

    This is not the only financial struggle facing Pembroke. A foreclosure auction is scheduled for an office building in Oak Brook after a Pembroke venture allegedly defaulted on $25 million in debt. The property was also under-leased and struggling to cover its debt service costs.