In another sign of trouble for real estate investment firm Strategic Properties of North America, a condo owner is suing the company for breach of contract, common law fraud and violating the Illinois Consumer Fraud and Deceptive Business Practices Act.
The condo owner, Jon Taylor, owns the penthouse at 200 North Dearborn Street, a 310-unit building that Strategic has been attempting to buy and convert to apartments for nearly two years. Taylor is also a member of the condo board. The lawsuit, filed via Taylor’s development firm Blitz Capital Group, alleges that Strategic “misrepresented their financial ability to complete the purchase of Blitz’s unit and other units in the building.”
“We’ve been trying to work with the seller for nearly two years,” said Taylor’s attorney Sean Byrne. “And we’ve gotten a whole lot of incomplete answers.”
A supermajority of condo owners voted in July 2022 to sell the building and all of its units to Strategic for $96 million. The sale was originally set to close in November 2022 but has been extended by the board several times at the company’s request.
Strategic’s struggle to close the deal at Dearborn mimics a similar predicament that the firm faced over a bulk buyout of a River North condo called Ontario Place. In June 2023, the condo board of Ontario Place backed out of their buyout with Strategic, after three years of failed attempts by the firm to close on a $190 million purchase of the building.
Adding to Strategic’s woes, an affiliate of the company was hit with a $26 million foreclosure lawsuit Feb. 9 over a Gold Coast building it had previously converted from condos to apartments.
Principals at Strategic, Yitzy Klor and Saul Kupperwasser, did not respond to requests for comment.
A statement from Strategic that recently circulated among Dearborn condo owners said the firm was having difficulty securing financing because of the “unprecedented disruption in the lending market.” The statement informed residents that Strategic has secured financing but faced “unexpected delays for regulatory processes,” and that the firm is continuing to search for additional lenders in the meantime.
Taylor’s lawsuit, however, alleges that Strategic not only misrepresented its financial abilities but also misled condo owners about its willingness to buy their units at market rate prior to the completion of the deconversion.
It alleges that in October 2022, in exchange for an extension on the due diligence period, Strategic sent an email to all condo owners saying that the firm agreed to “create an email address for all unit owners who needed to sell their units prior to the deconversion closing, with the caveat that any such sales would be at ‘the current market rate not the contract price.’”
The email indicated that Strategic would agree to buy individual units prior to the deconversion, but in a phone call with Taylor, a representative of the firm said it did not actually intend to buy individual units before the deconversion closing, the lawsuit alleges. Since then, Strategic has not bought Taylor’s unit, and the closing date for the deconversion has been amended multiple times.
The condo board voted Feb. 13 to extend Strategic’s closing date to May 13.
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