Strategic Properties of North America has fumbled its second big downtown Chicago condo deconversion attempt in less than a year.
The condo board of 200 North Dearborn Street voted this week to terminate its agreement to sell the 310-unit Loop building to Strategic for $95 million, after it failed to secure financing for the deal for over two years.
“I am beyond ready to move on,” condo board member Jonathan Taylor said.
The deal’s implosion follows a River North condo board’s July vote to terminate its agreement to sell a 467-unit property, known as Ontario Place, to Strategic for $190 million. At the time, one board member called the process of working with Strategic “hell for the past three years.”
In both instances, representatives of Strategic, which is led by Saul Kupperwasser and Yitzy Klor, evaded detailed questions about the progress of the sale and repeatedly pushed back the closing date while promising that financing was still coming.
A statement from Strategic that circulated among Dearborn condo owners in February said the firm was having difficulty securing debt 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.
Klor and Kupperwasser did not respond to requests for comment.
The condo board at 200 North Dearborn agreed to sell the building to Strategic in July 2022, when interest rates were significantly lower than they are today. At the time, Strategic indicated it could close the sale in under five months, Taylor said.
Some condo owners were won over by the guaranteed buyout prices Strategic was offering. Those residents felt confident at the time that they would be able to secure loans with favorable interest rates, should they choose to buy a different home with the proceeds of their sale to Strategic.
But the longer Strategic went without securing financing, the higher interest rates climbed. Some condo owners wanted to hold out hope that the sale would still go through. They were worried that taking their property to the open market would result in a lower sale price than was being offered by Strategic, Taylor said.
Others felt their units could be worth more in the near future, as Google grows closer to moving thousands of workers into the nearby Thompson Center, which is being redeveloped for the tech giant.
Discontent stewed among residents who were barred from selling their units individually while awaiting the closing with Strategic. The condo board last year sued two owners for refusing to sell their units to Strategic, and some other owners blamed the holdouts for delaying the sale.
The tension culminated in a heated condo board election last fall, with pro- and anti-sale candidates and their supporters resorting to mudslinging as they jostled for votes.
When new board members were elected, including Taylor, they pushed Strategic for more detailed information about the status of the financing. When that was unsuccessful, they asked Strategic to consider setting aside extra money in escrow as a way to show the firm’s commitment to completing the sale, Taylor said.
When Strategic refused, more condo owners agreed it was time to vote to give up on the sale. The vote to terminate the deal passed 3-0, with one abstaining condo board member and one absent member.
“I think people felt in some ways more aligned by the end of this, because we are all just stuck in this together, and misery loves company,” Taylor said.
Comments flooded the condo building’s Facebook page when news of the vote spread.
“What a relief to finally have a clear path forward and full autonomy of our own property. It has been a long two years awaiting a resolution, one way or another,” one commenter wrote. “Thankful to the board for coming to a decision today.”
Meanwhile, Taylor is suing Strategic for consumer fraud and deceptive business practices. Because of that pending lawsuit, he was the board member who abstained from the vote to terminate the contract.
He encourages fellow condo owners to pursue similar claims.
He said he expects his unit will now sell for less on the open market than what Strategic offered to buy it for two years ago.
“They wasted two years of time that people could have been selling their units and putting that capital to work,” he said.
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