Foreclosure hits Condor Partners’ Pilsen office
$32.5M loan on Mural Park property was serviced in May 2022
A New York lender is closing in on the troubled Mural Park office lofts in Pilsen.
Ready Capital initiated foreclosure proceedings in April against Chicago’s Condor Partners, the owner of the two-building property at 1900 and 1911 South Sangamon Street, according to Cook County records. The move came several months after DBRS Morningstar reported that the $33 million loan on the property was under water.
Neither Condor nor representatives for Ready Capital responded to requests for comment.
Morningstar projected in February that the loan would result in a 20 percent loss. It has been in special servicing since May 2022, when Condor was unable to fully refinance the debt. Masonry service provider MBB Enterprises of Chicago, also filed a mechanic’s lien against the property in early 2022.
The loan originally matured in December 2021, and while Ready Capital gave Condor a short-term extension, the lender ultimately opted to explore foreclosure and other strategies to work out the debt, according to Morningstar’s February report.
Condor, a real estate investment and development firm, renovated the two 100-year-old buildings in the gentrifying Pilsen neighborhood southwest of the Loop into commercial office space starting in 2017.
One of the buildings is fully leased to Health Care Service Corporation, which puts the occupancy rate for the two buildings overall at 68.5 percent.
But that deal alone – a 10-year lease at $24 per square foot on a triple-net basis, meaning the tenant pays for property taxes, insurance and maintenance – wasn’t enough to keep Ready Capital from growing wary of the debt.
Morningstar reported that Condor had no available future funding under the existing loan’s terms to pay for the cost of new leases. Mural Park’s value was projected by a June 2022 appraisal to rise to $49.3 million by 2025 once stabilized by leasing revenue, but Condor hasn’t come close to achieving that, the ratings agency said.