Sal Becovic closed on an Edgewater condo complex in a bulk buyout of the unit owners after months of negotiations and will return it to its original state as a full-on rental property.
His Chicago-based multifamily firm, Becovic Residential, paid $31.5 million for the 154-unit Granville Tower at 6166 North Sheridan Road, which has been rebranded by the buyer as the Duplex Tower. Kiser Group’s Andy Friedman and Jake Parker brokered the sale.
The purchase concludes a saga that began in February, when the condo board of Granville Tower agreed to put the building up for sale. To close, Becovic’s offer had to gain approval through a vote among condo owners who collectively held at least 85 percent of the building’s value. When that threshold is reached, holdout condo owners can’t stop the sale and usually are forced to sign over their documents.
Becovic’s purchase of the site appeared imminent earlier this summer, but it took a while to iron out terms of the deal and didn’t end up closing until this week. That ends up being the pace of many condo deconversion sales since some unit owners may fight an attempted acquisition and other potential roadblocks buyers may run into.
Such transactions have become increasingly common in Chicago due to strong apartment demand, in conjunction with a murky outlook on midmarket condos in the area. For years, condo values were stubbornly stagnant and many didn’t fully recover from hits they took during the Great Recession. At the same time, multifamily rents in Chicago kept rising, giving investors chances to acquire chunks of units in condo buildings and push for converting them into standard rentals under one owner through bulk sales.
“The condominium market in the area has been robust, but properties like Granville Tower, with high dues and upcoming maintenance needs, have faced challenges in resale, making a deconversion sale an attractive option,” Parker said in a statement. “Despite the challenging interest rate environment, well-located real estate like that of Granville Tower continues to garner strong demand.”
Some condo owners have made windfalls through so-called deconversion sales, which tend to get the unit owners higher prices than they would fetch with an individual unit sale on the open market. Parker said this one came out to a 50 percent premium over market prices for the condo sellers.
But they’re often tricky to pull off, due not only to holdout unit owners but also tightening local regulations, and, these days, rough debt markets. In River North, for instance, Strategic Properties of North America dragged out what would have been the priciest deal ever at $190 million to buy the 467-unit Ontario Place condos, but the firm never closed after years of negotiations and the deal fell apart, angering many of the would-be sellers.
The Granville Tower was built in the 1960s and converted into condos in the 1980s. The building comprises 98 one-bedroom units and 56 two-bedrooms. The site also includes 98 parking spaces, an outdoor patio and a pool. Additional amenities could be on the horizon, as Becovic plans to renovate the property, as well.
With the acquisition, Becovic’s multifamily portfolio now encompasses more than 2,600 housing units in the North Side, his firm said.
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