Nearly two years after the condo board at a Chicago high-rise terminated an agreement to sell their building to deconversion specialists Strategic Properties of North America, the firm came back with another offer — and was met with a resounding no.
After buying dozens of condos in the 310-unit building in the Loop, SPNA offered $95 million to purchase all of the remaining units in a bulk sale in 2022. The Lakewood, New Jersey-based company, led by Saul Kupperwasser and Yitzy Klor, has made a name for itself in the high-stakes business of converting condo buildings into rental apartments.
Unit owners at 200 North Dearborn Street initially agreed to the bulk sale to SPNA, but the firm failed to secure the financing necessary to close the deal, and condo owners were left in limbo for over two years. While the sale was pending, they were barred from selling their units individually, according to their agreement.
The condo board voted to terminate the contract in May 2024.
When news of the second offer spread this week, the condo building’s Facebook page lit up with condo owners criticizing SPNA.
“This is absolutely ridiculous. We cannot seriously go through this again,” one member of the Facebook page wrote.
The deal was swiftly shot down.
The 200 North Dearborn condo board voted 4-0 to reject the offer, condo president Jonathan Taylor confirmed to The Real Deal, though he declined to disclose the amount offered.
“It wasn’t as good as the offer that we were under contract for last time,” he said.
According to the condo board’s bylaws, the board was tasked with evaluating the likelihood that fellow condo owners would support the offer in a building-wide vote. If the board was confident that the offer could get some traction, regardless of board members’ individual opinions on the potential deal, they would agree to pay attorneys to draft a contract to present to all the condo owners for a vote, Taylor said. But after evaluating the terms of the offer, the board agreed it was likely to fail.
“What is wrong with them?” another commenter on the Facebook page said, referring to SPNA. “If there are people who want to sell their units, do it when they get a good price …. Leave the rest of us out of this slimy deconversion deal.”
Kupperwasser and Klor did not respond to requests for comment.
SPNA has successfully converted condo buildings in Chicago to rentals in the past. The cyclical business thrives when the condo market is oversupplied, and rent is on the rise.
Yet, since 2020, SPNA has fumbled three Chicago conversion deals, including the two offers to buy all the remaining units at 200 North Dearborn Street.
The third failed deal was a $190 million offer to buy a River North condo building called Ontario Place. Initially, the building’s condo board also agreed to the bulk sale. But after SPNA failed repeatedly over three years to secure the funding necessary to close the purchase, the board backed out of the deal. At the time, one condo owner called the waiting game, “hell for the past three years.”
After SPNA’s first offer to buy all the units at 200 North Dearborn, tension escalated between condo owners who wanted to sell to SPNA and those who wanted to cut ties with the company, resulting in a contentious condo board election in late 2023.
It also spurred a lawsuit from Taylor, who alleged that SPNA had committed consumer fraud by making an offer it couldn’t support. The case is currently pending in Illinois appeals court.
SPNA’s failed condo deconversions aren’t the only setbacks the firm is facing.
Attorneys for Chicago-based Byline Bank this month 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.
Around 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.
SPNA also recently sold a converted apartment building in Chicago at a loss, while listing another for sale.
Laramar Group bought SPNA’s Wave Lakeview apartments for $57 million last month. SPNA last refinanced the property for $62 million in 2019, public records show. SPNA had 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 Avenue, or if the company paid down the principal on its latest $62 million note from MF1 before selling the property.
In October, the company also listed the K Square Apartments in 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.