With legal battles resolved, River City deconversion moving forward

After years of negotiations and months of legal wrangling, Marc Realty’s deal for the complex is set to close in December

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

After years of negotiations and months of legal wrangling, Marc Realty Capital’s deal to buy the River City condominium complex and turn it into apartments is set to close soon.

With three separate lawsuits now resolved, unit owners in the South Loop complex will finally sell to Marc Realty, said Kelly Elmore, a lawyer with Kovitz Shifrin Nesbit who is representing the River City condo association.

The agreement marks the end of a three-year saga that saw drawn-out negotiations between Marc Realty and condo owners, a contested vote to approve the sale and lawsuits challenging the deal. The deal is set to close the week of Dec. 17, Elmore said.

“We’re looking forward to finally closing this deal,” she said.

With the lawsuits resolved, Marc Realty and partner Wolcott Group will pay $90.5 million for all 449 units in the River City complex at 800 South Wells Street in the South Loop. When it closes, it will be the second most expensive condo deconversion deal in the city’s history, behind ESG Kullen’s $112 million takeover of the 391 units at 1400 North Lake Shore that closed in August.

Negotiations over the River City deal began in early 2016 and continued until late August, when River City owners voted to accept the $90.5 million offer. But as soon as the approval was secured, legal challenges started pouring in.

On Oct. 3, a group of 20 condo owners sued River City’s condo board, accusing the board of stuffing the ballot and alleging the vote to approve the sale was held improperly.

In early November, three separate auditors determined the vote to sell River City was approved by more than 77 percent of unit owners, above the legal threshold of 75 percent needed to sell, Elmore said. A judge dismissed the claim that the vote was held improperly, she said.

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The condo board also filed lawsuits in the case: one that sought to clear up a title snafu that threatened to derail the sale, and one that asked a judge to require at least 19 unit owners to comply with the sale by turning over needed paperwork to the board. The title snafu was cleared up by a judge’s ruling, and the lawsuit against the unit owners was dismissed after they began to comply, Elmore said.

The $90.5 million price was agreed to only after protracted negotiations.

In 2016, Marc Realty, Wolcott Group and the condo owners agreed to a $100 million sale price. But the developers lowered the offer in May 2017 to $89 million, saying they discovered costly needed repairs.

That price was rejected by owners, and Marc Realty came back with a revised offer of $90.5 million that was accepted in late August.

Marc Realty and Wolcott Group were to throw in another $1 million if the deal closed by Nov. 28. It is unclear if that deal will be offered for the December closing date. Marc Realty partner David Ruttenberg did not return a request for comment.

Condo 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.

Despite their popularity, deconversion deals are often complex, with legal landmines, financial obstacles and homeowner emotions frequently gumming up deals.

Still, the River City deal was one of the most drawn out and “most difficult” deconversions the city has seen, said Elmore, whose law firm specializes in deconversions and other condo matters.

“Every deconversion has its own unique set of circumstances,” she said.