A deal between two Chicago-based firms likely marks the first large-scale multifamily sale under the city’s new controversial right of first refusal ordinance.
CRG sold the 134-unit AM1980 Apartments on Bucktown’s border with Logan Square to CedarSt this week for $35 million, in a transaction that CRG’s Tom Shanabruch called a “frustrating process” due to Chicago’s new set of constraints on sales under the Northwest Side Housing Preservation Ordinance.
“Being the guinea pig in the process for this large-scale sale was interesting and sometimes a frustrating process, but we got through it,” said Shanabruch, CRG’s vice president of investments and capital markets.
The purchase was an opportunity to “acquire one of Chicago’s top multifamily assets in a supply-constrained market,” CedarSt CEO Will Murphy said in a press statement.
CedarSt is rebranding the property as The Weyland.
The Northwest Side Housing Preservation Ordinance, passed by the city council in late 2024, created a pilot area in parts of Logan Square, Avondale, Hermosa, Humboldt Park, West Town and Pilsen. In it, tenants are given the right of first refusal if a landlord sells a building, and existing demolition fees are increased for developers seeking to replace multiunit buildings with single-family homes.
The program was designed to protect tenants in gentrifying areas, especially neighborhoods like Bucktown or Logan Square. The area lost 6 percent of its two-flat to six-flat buildings between 2013 and 2018, according to the DePaul Institute for Housing Studies.
But after outcry from longtime property owners, the city council later voted to remove parts of the 31st and 36th wards from the pilot area.
The AM1980 Apartments, at 1980 North Milwaukee Avenue, were still subject to the new regulations.
Still, Murphy said the transaction went as smoothly as it could have on their end.
“Although we believe it’s a very low likelihood tenants will ever exercise their rights under this ordinance, it was a relatively efficient process from our perspective as buyer,” he said.
CRG developed the 7-story building with ground floor retail with the help of a construction loan of more than $23 million from Iowa-based Principal Life Insurance, originated in 2017, public records show. CRG retired the construction debt in 2021, replacing it with a new $24 million mortgage loan, also from Principal.
The firm signed off on maturity date extensions with the lender twice in the years since then, first to buy another year until April 2025, and again a few months ago to push the due date to April 2026, public records show.
But offloading the property was not a simple process. CRG listed it before the right of first refusal ordinance passed, but did not close a deal before it took effect.
To get the deal with CedarSt across the finish line, Shanabruch said CRG worked with attorney Kate Duncan at Quarles & Brady to ensure the sale process complied with city regulations. Proving that tenants had been notified of the sale and given the opportunity to form a tenant’s union was no simple task, he said.
CRG sent certified mail to tenants of all 134 apartments notifying them that the building was being sold, which was an expensive process, he said. But getting a response proved even more difficult.
“We had to get a certain percentage of them to agree that they weren’t going to form a tenant union, and they did not want to purchase the building,” Shanabruch said. “But we did not get enough written responses from them. So we ended up sending it via Docusign, and it really took a persistent DocuSign effort to get the signatures we needed.”
Shanabruch credits CedarSt’s understanding of the local market for the ultimate success of the sale.
“They were fully understanding of the ordinance because they’re in the neighborhood already,” he said. “The bottom line is patience is required.”
Initially another Chicago-based firm, Bradford Allen, put in a $38 million offer on the property in November 2024. But that deal fell through and wound up in court.
Representatives of Bradford filed a lawsuit against CRG in July, after Bradford pulled out of the deal in March. Bradford claimed that the CRG affiliate that owned the property misrepresented its operating expenses, as well as lease terms. After the deal fell through, Bradford sued to retrieve $1.9 million it deposited into escrow.
But CRG so far has stood firm that it has the right to keep the money, alleging Bradford Allen didn’t live up to its contractual obligations as part of the sale of the property, court filings show.
Bradford also noted in court filings that the right of first refusal ordinance played a role in the deal going south because it added another complicating factor to the process, legal records show. The case is still pending in Cook County Circuit Court.
Shanabruch declined to comment on the litigation.