The walls are closing in on a once prominent condo deconversion team.
Strategic Properties of North America, led by Saul Kupperwasser and Yitzy Klor, is facing foreclosure on its Skokie office building. The firm is based in Skokie and Lakewood, New Jersey.
Attorneys for Byline Bank this week filed a foreclosure complaint against SPNA for a promissory note that has allegedly been in default since August.
Byline alleges that the bank issued a $496,000 note to Kupperwasser and Klor in 2017, but in August they stopped making payments. Byline alleges the duo currently owe $340,000 on the loan.
About the same time that the pair took out the promissory note, they also secured a $397,000 mortgage from Byline on their one-story, 5,400-square-foot Illinois office property at 5009 Oakton Street in Skokie.
Byline is now requesting that a judge order a judicial sale of the building to pay back the note.
Kupperwasser, Klor and attorneys for Byline did not respond to requests for comment.
The filing is the latest sign that SPNA is facing mounting financial trouble. The condo deconversion specialists had two proposed purchases fall through in recent years due to lack of financing.
The company bought dozens of condos at the 467-unit Ontario Place in Chicago’s River North, but after three years of negotiations, failed to close a $190 million purchase of the remaining units. The deal imploded in June 2023 when SPNA failed to put up $700,000 as a show of good faith to the remaining sellers.
In 2024, SPNA fumbled a second condo deconversion at a condo building at 200 North Dearborn in Chicago. The condo board voted to terminate an agreement with SPNA to sell the remaining units for $90 million, after the company failed repeatedly to secure the financing needed to close the deal.
SPNA also recently sold an apartment building at a loss, while listing another for sale.
Laramar Group bought SPNA’s Wave Lakeview apartments for $57 million last month. The seller last refinanced the property for $62 million in 2019, public records show. SPNA converted the nearly 60-year-old building from condos to apartments in 2017 and took out a $46 million loan from Ladder Capital to help fund the deconversion, according to public records. It’s unclear how much total capital SPNA put into the deconversion of the 30-story, 207-unit Wave Lakeview at 420 West Belmont, or if the company paid down the principal on its latest $62 million note from MF1 before selling the property to Laramar last month.
Prior to the sale, the building had faced its share of challenges. Loan records indicate Wave Lakeview struggled to generate income for SPNA while the company owned and operated it. When SPNA refinanced the property with MF1 in 2019, the lender bundled the $62 million debt into a collateralized loan obligation package, public records show. Doing so made some of the loan’s details public.
The loan was watchlisted by its servicer in May 2021 for having a debt-to-service coverage ratio under 1, meaning the building’s income was not covering its operating costs, according to commercial debt tracker MorningStar Credit. It was later removed from the watchlist in August 2021 when SPNA secured an extension on the loan. More recent details of the loan are harder to determine because MF1 appears to have taken the debt off the public market at some point in 2022.
In October, the company listed the K Square Apartments in Chicago’s Lincoln Park. SPNA converted the 22-story, 268-unit property from condos to rentals in 2018, and listed the building for sale in 2023 with CBRE, before eventually taking it off the market. It is now listed with Berkadia brokers Nick Harris, Pete Evans and Richard Evans.