Nick McGinn’s First Capital seeks $51M suburban condo deconversion

Nick McGinn is ready to cash out of a Willowbrook condo complex with a big bulk buyout deal.

McGinn’s Wheaton-based firm First Capital Advisors holds more than 61 percent of the condos at the 304-unit Waterfall Glen complex at 16W477 Mockingbird Lane and is seeking a buyer who will pay $51 million, or about $170,000 per unit, to take over the entire complex and turn the property into traditional rental apartments.

The so-called condo deconversion attempt prolongs a Chicago-area trend that’s picked up steam in the suburbs in recent years after bulk sales became harder to pull off in the city.

Brokers Sean Connelly, Matt Petersen and Liam Moore of 33 Realty are marketing the southwest suburban asset spanning about 24 acres on behalf of the condo sellers.

To proceed with a bulk buyout, the condo association would have to hold a vote among the unit owners, and if a group holding at least 75 percent of the cumulative value of the property agrees to sell, the deal can proceed, forcing anyone who held out against selling their home to give it up anyway as part of transaction. The fact that McGinn’s firm holds a large chunk means only a few individual owners have to approve of the deal to reach the threshold.

While deconversions can be a complicated and drawn out process — as exemplified by the recent turmoil that killed a deal for the Ontario Place building in Chicago’s River North area — they offer several advantages to both buyers and sellers. An apartment developer can evade high construction costs and pay a premium for the units while still being able to make money off renting them out, which often allows condo owners to make a greater profit than if they were to try and sell their unit individually. Plus, the owners get to avoid the headache of funding necessary repairs that their condo association may have been pushing off for years.

Condo deconversions became a boon for Chicago’s multifamily market in the 2010s following the Great Recession, which led to a drop in homeownership rates and an increase in apartment demand.

In 2019, the bulk buyout craze cooled off for Chicago condo buildings after the required approval rate needed for a sale was raised from 75 to 85 percent in the city. However, they’ve regained popularity in recent years as rents and apartment demand have soared, and most suburbs don’t regulate the voting process any more tightly than the state’s required 75 percent voting threshold.

Many of the other owners are already competing with McGinn’s block of units for tenants, as 85 percent of Waterfall Glen’s units are already rentals, giving potential buyers a chance to inherit revenue streams.

The 33 Realty team is emphasizing the value-add opportunity, as a buyer would be able to raise rents to market levels after performing necessary renovations.

Monthly rent at the site ranges from $1,200 to $1,975, and floor plans range from 780 to 1,180 square feet, according to Apartments.com. The average rent in Willowbrook is nearly $1,800 per month, according to RentCafe.

In July, Becovic Management Group paid nearly $32 million for the 28-story, 154-unit Granville Tower in Edgewater, equating to about $207,000 per unit. Other condo deconversions to close this year include the 94-unit property at 3825 North Pine Grove Avenue in Lakeview, which Lakeview Realty Partners bought for $18.3 million, or $194,000 per unit.

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