The Real Deal Chicago

ESG Kullen calls off $112M Gold Coast condo deconversion

After building owners voted to accept the buyout offer, the firm could not find an equity partner
December 11, 2018 04:00PM

1400 North Lake Shore Drive and ESG Kullen’s Eric Granowsky (Credit: Gold Coast Realty and Multifamily Forum)

ESG Kullen called off its plans to acquire a Gold Coast condo tower and convert it into rentals, putting the city’s biggest ever condo deconversion deal on ice.

The New York firm in August reached a $112 million deal with owners in the 391-unit building at 1400 North Lake Shore Drive, but it’s now backing out after failing to find a partner to help finance the purchase, according to Crain’s.

ESG Kullen’s first attempt to buy the building was narrowly rejected by unit owners in July, but it won over the owners by offering to pay premiums on units with recent renovations. The deal was set to be the priciest condo deconversion in the city’s history.

Chicago has seen a surge in condo deconversions due to a strong rental market, but the process to deconvert a building is filled with potential legal and financial hurdles.

Another major deconversion deal that has seen many fits and starts — Marc Realty Capital’s attempts to acquire the River City complex in the South Loop — is on again after Marc Realty and the sellers in November resolved their legal conflicts. [Crain’s] — Joe Ward