An affiliate of Chicago’s most prolific condo deconversion buyer has added a $26 million foreclosure lawsuit to the firm’s reputational woes.
The landlord of the 70-unit property at 1211 North LaSalle Street in the Gold Coast neighborhood that pulled off a bulk buyout of individually owned condos a few years ago has fallen into trouble with its lender CoreVest Finance, according to a lawsuit.
The property owner has been linked in court filings to Strategic Properties of North America — the city’s biggest condo deconversion buyer that’s struggling to close a $96 million purchase in the Loop after its $190 million River North deal blew up last year amid the firm’s delays.
CoreVest this month alleged the owner of 1211 North LaSalle defaulted on a $26.4 million loan used to buy out the building’s former individual condo owners in a controversial deconversion deal brokered in 2022.
The foreclosure suit filed Feb. 9 claims that the Strategic Properties affiliate first defaulted on the loan in December of last year and failed to make payments in subsequent months, according to court filings. The lawsuit was filed against LaSalle Towers Property LLC — an entity controlled by Aharon Singer — as well as two entities that have liens against the property.
Strategic Properties (SPNA) could not be reached for comment when contacted Friday. The attorney representing CoreVest, Bryan Minier with Lathrop GPM in Chicago, also did not respond to requests for comment.
One of the lienholders is broker Matthew Fritzshall, whose firm Triton Realty Group was notified this month it was named in the foreclosure lawsuit because of its dispute over a $380,000 commission he claims he’s owed for the condo buyout deal. He claims he brought SPNA to the condo association as a buyer, and then the parties, through Singer, made a deal that cut the broker out and dodged paying the commission.
“We worked real hard on getting a deal together and they just really sidestepped us,” Fritzshall said in an interview.
He placed a broker lien on the property for the commission before the sale was finalized to ensure he would be paid by the condo association for his services in procuring a buyer. The condo association responded by filing a lawsuit against Triton Realty, SPNA, Singer and LaSalle Towers Property LLC in July of 2022 in an attempt to extinguish the lien.
Triton Realty responded with a counterclaim filed in September of 2022. The three parties have been battling it out in Cook County court ever since, according to court records.
Singer, who signed the mortgage with CoreVest, denied in court records he has any interest in SPNA, and the landlord has denied it had any agreement to pay Fritzshall a commission.
Yet court records, mortgage documents and people familiar with the Gold Coast building point to SPNA’s involvement in the deal. Dov Grinblatt, who was formerly an attorney and COO for SPNA, was named as a contact on CoreVest loan documents, public records show. Reached Friday, Grinblatt said he no longer works with SPNA.
The firm, which has also closed tricky condo deconversions at 2 East Oak Street and elsewhere in the Chicago area, has been accused of dragging its feet on big bulk buyout deals, including one it’s still working to complete at the 310-unit property at 200 North Dearborn.
The condo board at the 467-unit 10 East Ontario Street last year pulled out of the $190 million contract to sell the building to SPNA after years of the firm failing to close.
SPNA recently provided a glimpse into the difficulty of financing large condo buyouts since interest rates have risen. While asking the condo board at 200 North Dearborn for more time to close its sale, it said it’s on track to get a high-interest loan while still shopping for debt.
“Typically, securing debt for these transactions has been straightforward, with multiple lenders vying for the opportunity. However, the lending market shifted dramatically subsequent to our initiation of the deconversion for 200 North Dearborn,” an attorney for SPNA wrote in a letter to condo owners that was reviewed by The Real Deal.
SPNA told condo owners that it secured a loan with Fairchild, a commercial financing company based in California, for 3 percent above market interest rates.
“Despite the higher cost, SPNA remains committed to closing the deal and has proceeded with their terms,” the letter states. “While progress has been made, unexpected delays persist due to regulatory processes associated with the source of their funds being from overseas.”
In the meantime, SPNA said it has also been in talks with “alternative lenders” at “even higher costs” because it understands “the urgency of finalizing the transaction” for condo owners. SPNA said it will go with whichever lender can “expedite the process most efficiently.”