The Real Deal Chicago

Marc Realty lowers offer on South Loop condo deconversion to $89M

The developer had agreed to pay $100M for River City's 449 units
June 01, 2018 04:00PM

River City and Marc Realty partner David Ruttenberg (Credit: Jess R. via Flickr)

Marc Realty Capital has pulled its $100 million offer to buy all the units of a South Loop condominium then convert them into rentals.

The developer now is offering $89 million to purchase all 449 units in the Bertrand Goldberg-designed riverfront complex called River City, according to Crain’s.

Had the $100 million offer closed on the building at 800 South Wells Street, it would have been the biggest condo deconversion in the city’s history.

Illinois law requires approval from at least 75 percent of condo ownership before a deconversion can take place, and a $92 million offer Marc Realty dangled in February 2017 failed to reach that threshold. The $100 million offer was accepted by 79 percent of ownership.

Deconversions have been taking place at a torrid pace over the past few years, as condo owners look to cash in on offers from investors willing to pay a premium to get a bigger share of the city’s hot rental market.

Kelly Elmore, attorney for the condo association, had said the deal with Marc Realty was expected to close in July.

But the developer and a financial partner, the Wolcott Group, recently told the association the deal was being terminated.

In a prepared statement to Crain’s, Marc Realty said, “during due diligence, (Marc and its partners) determined that the property has significant deferred maintenance issues that the purchaser(s) would need to address in order to pursue its plans for the property.”

Elmore told Crain’s the building condo board will meet again Monday to decide what to do with the $89 million offer. She declined to say what deferred maintenance issues torpedoed the $100 million sale.

Marc Realty proposed buying River City in January 2016 for $81.4 million. Over the course of its offers, some owners said the amounts being offered weren’t enough to let them buy again in the same neighborhood, where home prices have been rising fast.

The firm is also behind another big pending deconversion, offering $30 million for 110 East Delaware Place, which would come out to $441,000 per unit. [Crain’s] — John O’Brien