Lender gets $12M for distressed South Side multifamily portfolio

A local investor picked up a 237-unit multifamily portfolio on Chicago’s South Side for almost $12.3 million in foreclosure sales that closed late last month, in the latest among the growing number of opportunities to snag distressed assets as rising interest rates crush borrowers.

The portfolio consists of 10 buildings across the Grand Crossing, South Shore, Woodlawn and Washington Park neighborhoods, and was previously owned by Adam Walls, the CEO of the local real estate firm 5812 Group.

The sale price came in below the total amount of the mortgages that 5812 ventures owed on the properties, which was almost $17.6 million, and even less than the $26.4 million total allegedly owed on the debts with fees and interest, according to the foreclosure suit. The debts were originated by Wells Fargo before getting packaged up with other loans and sold off to investors in commercial mortgage-backed securities markets.

Wilmington Trust, as trustee for the bondholders in the mortgage, filed a foreclosure complaint against the property in late 2021, claiming the borrower defaulted on loan payments in 2020.

A judge authorized a foreclosure sale in October 2022; the brokers began marketing the properties in the spring and the sale was held on the online auction platform RIMarketplace in June before closing last month.

Walls and 5812 Group could not be reached for comment. Wilmington Trust declined to comment. CWCapital was the loans’ special servicer that oversaw collection of the debts and its resolution once they became delinquent.

After Wilmington had the real estate under control through the foreclosure process, the properties were marketed and sold as two separate offerings, though both were bought by the same investment group. The brokers declined to name the buyer, whose identity wasn’t immediately available in public records.

Baum Realty Group’s Tyler Dechter handled the sale of the four buildings at 5253 South Prairie Avenue, 6214 South Eberhart Avenue, 6952 South Clyde Avenue and 7645 South East End Avenue, which total 104 units, for $5.55 million, according to a source familiar with the deal.

Matthews Real Estate Investment Services’ Finley Askin marketed the six buildings at 7701 South Green Street, 7646 South Ingleside Avenue, 7053 South Wabash Avenue, 7001 South Michigan Avenue and 125 East 71st Street, which total 133 units, for $6.7 million.

Dechter said the bidding process was competitive, with interest from national and local groups.

“It was a strong price for showing that there’s still demand for multifamily assets in Chicagoland,” he said.

Askin added that “even with the things we’re dealing with in the market, if assets are priced correctly there’s still a lot of buyers in the market ready to buy.”

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