The winds of change have blown into The Windy City.
Two of Chicago’s most talked-about development projects made news this week, while the residential market saw a record-setting sale and a potentially record-setting listing, making for a very interesting week in real estate.
Jim Letchinger’s firm JDL and his equity partner, Los Angeles-based Kayne Anderson, announced Thursday that they’re moving forward with purchasing the site’s 31-acre northern parcel on the western edge of Lincoln Park along the Chicago River’s North Branch.
The purchase charts a new course for the $6 billion mega-project known as Lincoln Yards.
JDL is buying the parcel from Bank OZK, which seized control of the land earlier this year from a joint venture of Dallas-based Lone Star Funds and Chicago-based Sterling Bay.
Lone Star Funds and Sterling Bay have been struggling for years to fulfil their vision for a megadevelopment planned to include 14.5 million square feet of buildings.
While JDL’s official announcement didn’t reveal the scope of the new development team’s plans, people familiar with the move said they’re eyeing the construction of about 1,000 housing units. The residential component would be mostly rentals, but with some to be sold. The plan also calls for about 60,000 square feet of retail, riverwalk improvements and a large public plaza.
The price of the 31-acre parcel that Chicago-based JDL and Kanye Anderson are set to acquire is said to be around $80 million, well below the $125 million debt that Bank OZK was owed by Sterling Bay and Lone Star at the time of their loan default on the 31-acre site.
JDL and Kayne previously negotiated with Sterling Bay’s other equity partner, JP Morgan Asset Management, on the 22-acre parcel on the other side of the river at the northern edge of Bucktown but progress has so far stalled.
In the Loop, another high profile project got caught in the crossfire of a legal dispute between the Prime Group’s Mike Reschke and one of his early business partners.
Investor and orthodontist Edward John claims in a lawsuit filed last month that the Chicago-based real estate firm the Prime Group owes him $45 million stemming from two loans Prime issued to him in exchange for some of his shares in the company.
John claims that the highly-anticipated redevelopment of the Thompson Center into Google’s Midwest headquarters, led by a joint venture of Prime and Quintin Primo’s Capri Investment Group, indicates that Prime is capable of paying back those notes.
Google tapped the joint venture to lead a $300 million revamp of the building while allowing the developers to collect a fee on the project. Construction began last year.
Prime, however, stated that the filing concerns “decades-old financial arrangements and internal governance disputes that bear no relevance to the company’s current day-to-day operations,” and that it is a “private, civil matter.”
Despite a tumultuous market, there’s always plenty to talk about on the residential side of the business.
A lakefront mansion sold for $11.4 million, making it the second-priciest residential sale in the Chicago area so far this year and one of several recent big-ticket trades along the North Shore.
The seven-bedroom, 15,800-square-foot home at 765 Sheridan Road sits on 1.3 acres with 100 feet of private Lake Michigan frontage, asking about $722 per square foot.
Meanwhile, a restored lakefront mansion in Kenilworth hit the market for $15 million, setting a listing price record for the wealthy North Shore village.
The home at 219 Sheridan Road spans 8,300 square feet on half an acre, asking $1,812 per square foot, according to the listing.
Amid all the noise, Chicago’s multifamily market continued to build momentum.
A venture of Chicago-based Laramar, sold a 242-unit suburban Warrenville complex, The Westlyn, for $59 million or about $245,000 per unit.
The buyer was Maryland-based Artemis Real Estate Partners, Du Page County records show. Property management firm RPM Living looks to be involved in the deal as well and is listed on a $39 million loan from Hartford Investment Management Company used to finance the transaction.
Editor’s note: this post was updated to correct the issuer of the promissory notes between The Prime Group and Edward John.