Lenders want to stop South Side apartment portfolio “fire sale”

Lenders on nearly 400 South Side apartments are trying to stop a court-appointed receiver from selling them at what the lenders deem “fire sale” prices.

The court-appointed receiver, Kevin Duff, is looking to sell a 12-building portfolio for investors who say they were scammed by Florida-based EquityBuild, which was accused in 2018 of operating a widespread Ponzi scheme, according to Crain’s.

The SEC says Jerome Cohen and his son Shaun Cohen raised at least $135 million from nearly 1,000 investors starting in 2010, and deployed the money into 79 apartment buildings and 34 single-family homes, Crain’s reported. But the firm and its affiliates sustained heavy losses and resorted to paying early investors with money from new investments, according to a civil lawsuit.

Duff, who sold numerous buildings last year, is asking a federal judge to approve the sale of 11 properties with 161 units for a total of $6.9 million, about 20 percent less than EquityBuild paid several years ago. One of the buyers is Longwood Development, which is acquiring seven of the properties.

Lenders that include Fannie Mae and Freddie Mac are asking the judge to halt the sales until coronavirus-related restrictions in Illinois are lifted and the real estate market stabilizes, according to Crain’s. [Crain’s] — James Kleimann