At a downtown Chicago housing development, Marty Paris’ firm Sedgwick Properties appears to be paying its bank but not its contractors. At his suburban River Forest project, it’s not paying the bank, or any contractors because substantial construction progress hasn’t been made after nearly eight years of planning and a groundbreaking ceremony held last year.
That’s all according to a string of lawsuits and liens that allege Sedgwick is struggling to complete high-end condo developments in prime locations in the Chicago area, most notably at the corner of Erie and LaSalle streets in River North.
Last month in that neighborhood, Sedgwick was advertising its residential project now called the Rhone with a shift from condos to luxury rentals — with monthly rates averaging $10,000 and going as high as $22,000. At the same time, the company behind the project, Chicago-based Sedgwick, was dealing with two ongoing legal fights: mechanic’s liens filed by the likes of elevator giant ThyssenKrupp, among other contractors, on the Rhone project, and a foreclosure lawsuit at the River Forest development.
Both disputes are still moving through the Cook County court system and show a year of financial challenges for the multifamily developer as interest rates have risen and getting construction financing becomes more challenging.
At the Rhone, at 144 West Erie Street in River North, mechanic’s liens fights first flared up in 2021. Over the last two years alone, claims from contractors alleging nonpayment for their work total nearly $1.4 million, including ThyssenKrupp’s that was filed in recent weeks. Attorneys working on the cases either declined to comment or did not respond to requests for comment, and Sedgwick’s attorney did not respond to a request for comment. Crucially, the Republic Bank of Chicago, which holds the $36 million mortgage on the property, has not moved forward with foreclosure, indicating the loan is being paid, according to public records.
Last year, Sedgwick changed the building’s name for a third time to Margaux. It had previously been named Bentham when Sedgwick started the project in 2017.
The project encountered several delays, and restarted in 2021 using its address as a name. It also got trimmed from 15 stories to 14 — meaning it lost its amenity floor. Sedgwick leader Paris previously blamed the city’s lethargic condo market, worsened by the pandemic and civil unrest downtown, for the project’s long timeline.
Despite the challenges behind the scenes, leasing at the Rhone is going well. The Apartment Source, the leasing brokerage working on the property, said that interest in the property is high, leasing numbers are on track and showing activity is steady. There’s been three completed deals and 12 active offers in the 31-unit building.
When the project was planned to be condos, unit listing prices ranged from $1 million to $3.2 million, according to previous reports. In River Forest, the units initially ranged in price from $699,900 to $1.45 million.
Buyers also showed strong demand for the River Forest project during its earlier phases of planning. Cory Robertson, the broker on the suburban project, previously said nearly all the units had pre-sold and some then resold at higher prices, although some buyers backed out of contracts due to the delays.
But Sedgwick’s lender, the Wintrust-affiliated Beverly Bank & Trust, filed a lawsuit in late April in Cook County court, seeking $4.2 million from the $20 million line of credit it issued in 2022. Robertson confirmed this week to The Real Deal that his brokerage group is complying with a subpoena from the bank’s attorneys.
“Plaintiff’s attorneys have stated that they have no reason to believe that our team’s strong sales performance and professional conduct are anything that would embroil us in the loan dispute itself between the two parties,” he said in a statement. “Corwin Partners continues to successfully market the project per our listing agreement with the developer.”
At the River Forest property, the developer planned a project set to cost more than $20 million to build that included 22 condos across four stories and 14,000 square feet of commercial space at 7601 Lake Street.
Affiliates of Sedgwick have filed a motion to dismiss the case, indicating it will fight the foreclosure rather than walk away from the project amid its sluggish pace. Its argument to toss Beverly’s suit cited the fact that the lender moved forward with foreclosure proceedings at the same time it filed a breach of contract case. That case has a hearing scheduled on Thursday.
Correction: The Rhone’s monthly rental rates have been clarified in the updated version of this story.
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