Lowensteins Sell South Side Apartments while Testing Lenders

A pair of South Side landlords got a much-needed win after selling a Kenwood apartment building for a big markup while facing trouble at other properties.

Raphael and Ari Lowenstein sold a 46-unit affordable apartment building at 4440 South Drexel Boulevard for $11.7 million, or about $250,000 per unit, to Chicago-based Zeegar Properties.

The Lowenstein brothers, who run 312 Properties, sold the building for a strong gain when compared to the $6.1 million they paid for it in 2020.

“Amid significant market uncertainty in 2020, Interra guided the sale of 4400 South Drexel when it was outdated and in need of meaningful upgrades,” Interra broker Lucas Fryman said. The brokerage represented the Lowensteins in both the 2020 purchase and the recent sale which closed last week.

Recent improvements include reconfigured floor plans, upgrading HVAC systems and the addition of new dishwashers and in-unit laundry, according to a press release from Interra. It’s unclear exactly how much the Lowensteins paid toward improvements at the property. They did not respond to a request for comment.

The apartment building was built in 1924 and is 91 percent occupied, with all tenants supported by vouchers from the Chicago Housing Authority.

It hasn’t been all smooth sailing for the building’s owners. The Lowensteins have been accused of allowing other properties they run to rack up local building code violations that leave tenants living in poor conditions.

Code violations on other properties at 4520 and 4830 South Drexel Boulevard and 4612-4626 South Lake Park Avenue nearly led the landlords to default on $54 million-worth of CMBS loans backing those buildings, but they later cleared the violations and secured new financing.

However, at 4520 South Drexel, the brothers have run into trouble again. The building’s CMBS loan was sent to special servicing in December for delinquent payments that began in August and a series of maintenance issues recorded in inspection reports, public loan data shows.

At 4830 South Drexel, loan data shows 312 Properties has been behind on loan payments since August, as well.

The investors have gotten out of similar situations in the past.The Lowensteins faced trouble toward the end of 2023 when lender Bellwether Capital Enterprise filed a foreclosure lawsuit over its loan on the Kenwood Residences at 6610 South Kenwood Avenue and a receiver was appointed. The firm hadn’t missed any loan payments but had racked up a series of code violations that triggered a default.

The landlords resolved the code issues, Lowenstein previously told The Real Deal, and did not have to turn the properties over to Bellwether.

No further documents have been publicly recorded that would suggest the lender is taking action against 312 Properties.

With some code violations resolved, new financing secured and recent sales completed, the company is headed in a better direction. The Lowensteins last month also sold a Bronzeville apartment at 4201 South Michigan Avenue for $4 million, according to public records.

The brothers listed that property last year along with another nearby apartment building at 4750 South Michigan Avenue. At the time, the pair hoped to fetch $10 million for both properties, a listing with SVN said. The 4750 South Michigan Avenue hasn’t yet sold, but with one property reaching nearly half the total sale price, their goal could be in reach.

The Bronzeville neighborhood has seen momentum in recent years after decades of population decline.

The neighborhood was a hub for Black population growth during the Great Migration in the early to mid-1900s, but years of disinvestment led its population to decline by more than 75 percent between 1950 and 2000, according to United Way of Metro Chicago.

Growth in nearby Hyde Park and the expected 2026 completion of the Obama Presidential Center library in Woodlawn has spurred an influx of interest recently, along with Farpoint Development’s planned $3.2 billion megadevelopment known as Bronzeville Lakefront.

On the residential side, a single-family home in Woodlawn set a record last year, selling for $1.2 million, which was $400,000 more than any previous home sold in the neighborhood.