Developers Bart Przyjemski and Anita Lisek found a buyer willing to take on a rare conversion of a Chicago rental property to a for-sale condo building.
Noah Properties, the Chicago-based development team founded by the husband-and-wife duo, sold The Avondale, a 52-unit townhome property at 4200 West Belmont Avenue, for $34 million to an out-of-state buyer, according to the Kiser Group brokerage.
Transforming the property, known as The Avondale, into for-sale units would mark a turn in the Chicago condo market, as a streak of big deals for buildings that went the other way — from condos into rentals — took hold of the city in the late 2010s and into the early 2020s. Those transactions, known as condo deconversions that put separately owned homes in a building under the ownership of one landlord, have slowed down, though.
If the buyer, who hasn’t yet been identified in public records, pulls off a conversion of The Avondale into condos, it would mark the second project taking the route in Chicago. Developer Crescent Heights began marketing units in 850 North Lake Shore Drive for sale as condos after buying that former rental building last year for $80 million, a substantial discount from its previous value.
Noah is moving on from the property after taking out a $26.5 million construction loan to build it in 2021 and testing the market for the property a year later after it was completed. However, it never sold, as the developer opted to refinance it instead with a $26 million loan from Ready Capital, and an appraised value of $35 million, public loan data said.
“They were originally intended to be for-sale condos, and the market wasn’t there for them in 2022, when it was still the tail-end of the pandemic, and Noah filled it up with renters,” said Kiser Group’s Andy Friedman, who represented the buyer in the Avondale deal. Jake Parker of the Kiser Group represented Noah.
The Avondale features large units, with 32 three-bedroom layouts spanning more than 2,200 square feet each, 16 four-bedroom at more than 2,500 square feet, and four five-bedroom units of 4,000 square feet.
While Noah appears to have cleared the Ready Capital debt with some room to spare on the sale, the developer still dealt with some financial pain due to a floating interest rate. Noah was likely putting in cash out of pocket to cover some debt service, after the interest rate hikes of 2023 ratcheted up the costs of floating deals, according to loan data collated by Morningstar Credit.
The loan data shows The Avondale generated nearly $2.3 million in revenue last year at 94 percent leased, but after over $800,000 in operating expenses and $2.4 million in debt service costs, there wasn’t takehome pay for Noah until the sale.