Strategic Properties (SPNA) plans to purchase all condominiums in a 467-unit building at 10 E. Ontario St. and convert them back to apartments. Requires patience and fortitude Even in the best markets. At $190 million, it will be the largest condo-to-apartment deal in Chicago and possibly the largest in the country.
However, rising interest rates and recent financial market turmoil have created new challenges for investors looking to finance real estate deals of all kinds. This now includes SPNA’s acquisition of Ontario Place.
“Unfortunately, the buyer informed us recently that due to economic pressure, some of our funding has been impacted and closing has been delayed,” the board wrote in an email. “The Board is currently working with the buyer to determine how this will affect the sale and to negotiate acceptable terms for this delay. It doesn’t mean it’s going to be delayed, it’s just delayed at the moment.”
The email did not elaborate on the reasons for the delay, and attorneys representing the board did not respond to requests for comment.SPNA executives did not return calls.
For years since condominium ownership began to become commonplace in the late 1970s, developers have been busy converting apartments into condominiums. But a few years after the housing collapse, Chicago developers began “dismantling” condos into apartments. This is a trend driven by the booming multifamily rental market. In 2019, a New York investor bought a high-rise condominium on the Gold Coast. $107 million buyout, It was the highest paid Chicago deconversion ever.
However, transactions require the consent of multiple, possibly hundreds, of sellers, making them difficult to execute. Chicago requires at least his 85% owners of condo properties to approve bulk sales of units to one buyer.
Ontario Place owners rejected the SPNA’s initial proposal in August 2020, which received 73.4% support for the building. After SPNA sweeten its offer, 89.8% owners of buildings voted in favor of the transaction September last year. Almost a year has passed since then, and SPNA has yet to close the deal.
A small but vocal minority of the owners continue to oppose the sale and are contesting the transaction in the United States District Court in California. But so far the judge has not intervened in the sale.