An affiliate of the Better Housing Foundation is selling more than a dozen of its South Side apartment buildings in bankruptcy court, part of an effort to help save the financially-distressed nonprofit.
The Better Housing venture that owns the 13 buildings filed for Chapter 11 protection in late January, after defaulting on $13.6 million in bonds secured by the properties, according to Crain’s.
The nonprofit — which owns nearly 1,000 units in the city — had amassed about 6,000 building-code violations in Chicago, and defaulted on another $156 million in debt payments, Crain’s reported.
Local landlord Pangea Properties has agreed to buy the buildings — adding a total of 281 units to the thousands that it already owns in Chicago — for $3.9 million. That’s 71 percent less than the face value of the bonds backed by the properties. Pangea is the preferred buyer in an upcoming auction, but it could still be outbid by another investor.
By promising to serve low-income residents by providing affordable housing and important services, Better Housing received tax breaks on its properties and nearly $170 million in bonds from the Illinois Finance Authority, according to Crain’s.
Other investors that bought the same bonds are also facing significant losses, as they traded this week for about 25 cents on the dollar.
In April, Better Housing said it wouldn’t be able to make an upcoming June payment on $85 million in bonds sold to buy a Chicago apartment portfolio. At the time, the affordable housing nonprofit said the financial performance of the nearly 1,000 South Side rentals has lagged because of the poor condition of the properties. Better Housing also had another 900 units in the suburbs, though those properties have fared better. [Crain’s] — Brianna Kelly