Strategic Properties Tweaking Condo Deconversion Strategy

Yitzy Klor’s Strategic Properties of North America is trying to find new ways forward to close two condo deconversions — one of them a Chicago record at $190 million — in moves that amount to a shakeup of plans amid owner opposition and rising interest rates.

As it faces a lawsuit over the record deal, the firm has also offered to buy individual units at 200 North Dearborn ahead of what was to be a $96 million bulk sale that would turn the condos into apartments, unit owners said.

Strategic would gain more control of the building if it makes any purchases, which will be for market rate prices instead of the higher premium unit owners usually get as part of condo sales involving all of a building’s units.

Strategic struck agreements with the two respective condo boards to extend closings for both the 310-unit 200 North Dearborn and the 467-unit 10 East Ontario Place, which would set the priciest condo deconversion in city history.

Reached by phone, Strategic Properties’ Dov Grinblatt said he couldn’t comment on the matters, though the firm’s tweak in strategy comes as the Federal Reserve raised interest rates another 75 basis points Wednesday.

Howard Dakoff, attorney for the condo board at 10 East Ontario, said Strategic Properties requested more time to close the deal, and the board agreed to amend the purchase agreement to extend the closing deadline to Dec. 31.

The firm will have to pay $250,000 to extend the due diligence period on the Dearborn property beyond next month to Jan. 11, and offer up a “significantly higher” amount of non-refundable money if the Ontario Place deal doesn’t close this year and it wants to extend it again, according to Dakoff.

“Nonetheless, both parties desire the transaction to close by December 31st,” he said in an email.

A message sent to Dearborn condo owners also invited those interested in selling their units immediately at the current market rate – not the deconversion contract price and without any of its incentives – to contact Strategic Properties.

The potential Ontario Street sale is the subject of an ongoing federal lawsuit brought by two condo owners in the 467-unit structure, Julius Cherry and Gerald Glazer.

Unit owners who hold at least 85 percent of the building’s value have already voted in favor of the bulk sale, meeting a legal threshold that allows the deal to close. Cherry and Glazer’s lawsuit says the condo association’s board improperly handled Strategic Properties’ offers and illegally extended a voting period to get approval after a previous attempt failed.

Illinois courts sided with the condo board and allowed the deal to proceed, yet the pair revived their case in federal court in California by naming Klor, his partner Saul Kupperwasser and the company as defendants, taking a new tack from earlier unsuccessful suits that involved the condo board. A judge has yet to rule, and is holding a hearing on the defendants’ motion to dismiss later this month, court records show.

Cherry and Glazer said in a motion last month the firm has repeatedly failed to tender the full purchase price in a timely manner and delayed closing at least seven times.