A 545-unit South Side apartment portfolio owned by a financially embattled housing nonprofit will likely be sold to an investor for pennies on the dollar.
The collection of 45 buildings had been in the massive portfolio of Ohio-based Better Housing Foundation, which has $55 million in outstanding debt on the properties.
Now, distressed buyer Saybrook Fund Advisors of California has agreed to pay $15.2 million for the so-called “Icarus” South Side portfolio in bankruptcy court, Crain’s reported. That’s a 65 percent discount on the $43.8 million that Better Housing forked over for the units three years ago, according to the report.
The low-income apartments have been neglected over the years, and occupancy is only at about 20 percent with many of the units having been damaged. Repairs will be costly.
Saybrook’s offer isn’t final and plans are also being developed to hire a broker and market the portfolio, according to the report.
Better Housing’s problems include an affiliate that declared bankruptcy in late January, after defaulting on $13.6 million in bonds secured by about a dozen rental properties. A month later, it was revealed that Better Housing itself was under investigation by the U.S. Securities and Exchange Commission.
Better Housing had owned nearly 1,000 units in the city, but since its entrance into Chicago five years ago, the company has amassed about 6,000 building-code violations, and defaulted on another $156 million in debt payments. [Crain’s] — Alexi Friedman