Deconversion At 200 North Dearborn Gets Heated

The potential buyer and sellers in a condo deconversion negotiation at 200 North Dearborn Street are both alleging the other side is blurring legal lines as condo owners mull over a $98 million offer for a bulk purchase of the building.

YK Investments, a venture led by Skokie, Illinois-based Strategic Properties of North Americas’ Yitzy Klor, made a $98 million offer on the building a few months after the building’s condo board rejected a similar offer.

The most recent offer was advanced to a building-wide vote in May and is expected to wrap up Monday. Ahead of the deadline, tensions have been rising between the buyers’ brokers and condo owners. State law requires 75 percent of condo owners to approve a bulk sale but a local ordinance bumps that number up to 85 percent within the city of Chicago. SPNA currently owns about 15 percent of the building’s units.

Emails obtained by The Real Deal show Klor’s brokers, Sharon and Santo Rizzo of RE/MAX, using increasingly aggressive sales tactics to get hold-out condo owners on board with the bulk sale, which include claiming that Klor is considering legal action against condo owners trying to rally fellow residents to reject the deal.

According to a recent email from the brokers, communications about the vote in the building’s Facebook group could constitute “tortious interference” in the potential sale.

“Unit owners have every right to organize and vote as they choose. That right is not in question. What has occurred in those forums has gone beyond lawful advocacy, and counsel has advised that there is a basis to pursue claims against the individuals responsible,” the email read.

The email went on to explain that all condo owners who have voted no and not responded to communications from the brokers could be “included in the scope of counsel’s review.”

“If you do not want your name on this litigation, personally as an individual unit owner, there is still time. Call Santo [Rizzo] in the next 48 hours. Have a conversation. That is all it takes to get your name off this list,” the email read.

Condo owners have expressed concern about the communications, including alleging it could violate the Illinois’ anti-SLAPP (Strategic Lawsuits Against Public Participation) laws that prevent potential plaintiffs from using unfounded legal threats to stymie free speech and petitioning.

“The buyer’s threat of litigation crossed the line and we will be sending the buyer communication asking them to stop,” the condo board’s legal counsel wrote in an email obtained by The Real Deal.

No lawsuits from either party have been filed, Cook County records show.

Klor and Santo Rizzo did not respond to requests for comment.

Despite the theatrics, experts say contentious negotiations are fairly standard in the deconversion process.

Both sides have a high bar to clear to claim the other is violating any laws governing the deconversion process.

“There’s no law that would prevent communication from these parties to each other,” said attorney Kevin Hirzel of communications between the buyers and potential sellers during the deconversion process in general.

Hirzel, Managing Member of Hirzel Law, specializes in condominium law but is not involved with the 200 North Dearborn Street property dispute specifically.

And condo owners have the right to voice their opinions to each other, said Adrienne Levatino, Associate General Counsel for the Illinois Department of Financial and Professional Regulation’s division of real estate.

“They have an economic and emotional stake in their homes and there’s no prohibition generally against them discussing any matter concerning their communal life,” Levatino said of condo owners in general.

It can also be hard for a buyer to prove a condo owner interfered with the sale.

“You have to show that somebody has done something specifically for the purpose of interfering with the business expectancy, if that’s the claim, or interfering with the contract,” Hirzel said. “It’s a fairly high standard to establish that type of claim.”

Many condo owners went into the vote with skepticism because Klor’s firm, SPNA, successfully achieved an 85 percent vote to pursue a bulk purchase of the building in 2022 for about $95 million but struggled to secure the financing necessary to close the deal.

As a result, condo owners were left in limbo for two years and were unable to sell individual units while the bulk purchase was pending. In 2024, the condo board voted to terminate its contract with SPNA.

SPNA has led successful condo deconversions in the past, including at the 30-story, 207-unit Wave Lakeview Apartments and 22-story, 268-unit The K Square Apartments in Lincoln Park.

“There haven’t been many deconversions since the period 2017 to 2020, and that was when there was a wave of them for lots of economic reasons,” Levatino said .

More recently, the company has fumbled similar efforts.

The condo board at Ontario Place in River North agreed to a $190 million bulk sale to SPNA in 2020, 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.”

The current condo owner vote at 200 North Dearborn is expected to close Monday, however, Klor’s brokers have indicated that he plans to continue to buy individual units while pursuing a bulk purchase whether the current deconversion vote passes or not.

“YK Investments is not going anywhere,” the email read.