TPG Angelo Gordon recently signed off on one of the city’s biggest multifamily foreclosures of the year, as Chicago’s suburban multifamily market outpaces the urban core.
New York-based TPG Angelo Gordon agreed to a deed-in-lieu of foreclosure last month, forfeiting 2 West Delaware Place to lender ACORE Capital, an affiliate of which had issued the 31-story, 189-unit building’s $130 million loan in 2020. The loan amount comes out to about $687,000 per unit. TPG acquired Angelo Gordon in 2023, forming TPG Angelo Gordon.
The transfer to satisfy the debt also extends a somewhat tumultuous history of ownership for the luxury building, which was originally developed as condos and opened in 2010, but sales fell flat. A group involving Angelo Gordon converted it into a rental asset in recent years, following the condo deconversion trail many other Chicago buildings have gone down since the Great Recession drained the for-sale condo market of much of its previous velocity.
Chicago-based JDL Development, with financial backing from Angelo Gordon and Harlem Irving, arranged a bulk purchase of 153 condo units in the 201-unit building in 2016, with plans to renovate and resell them, while also gradually acquiring other individually owned units for the same purpose. After just 9 of the renovated units sold, the Chicago-based developer abandoned those plans in 2017 and decided to rent the units instead.
In 2018, the owners scored an extension on its initial $104 million loan from Wells Fargo. They later refinanced the building and took out the $130 million with ACORE that ultimately ended with the deed-in-lieu of foreclosure.
Such deed-in-lieu agreements allow owners to transfer the title of a building to a lender without the lender filing a formal foreclosure lawsuit. In return, the borrower typically wants release from requirements like a repayment or completion guarantee, and a commitment that the lender won’t pursue legal action to enforce loan covenants in the future.
Representatives of Harlem Irving and ACORE did respond to requests for comment. A representative of JDL declined to comment.
The foreclosure highlights the current turbulence of Chicago’s commercial real estate market, which has seen an uptick of distress among multifamily players in recent months, with Loop apartment complex landlord Jonathan Holtzman and Related Midwest each getting hit with respective foreclosure lawsuits. Previously, financial distress was more limited to the office market.
While a handful of high-profile multifamily foreclosures have been recorded in Chicago this year, ranging in value from $26 million to $175 million, several have been tied to troubled borrowers.
Embattled condo deconversion specialists Strategic Properties of North America are behind two of the troubled big-ticket multifamily loans in Chicago. A third involved CA Ventures, a firm that has grabbed headlines for a string of legal battles.
It’s unclear if TPG Angelo Gordon’s decision to walk away from 2 West Delaware is driven by its recent merge of their respective portfolios, a broader concern about Chicago multifamily or a specific inability or unwillingness to refinance the asset.
Throughout the Chicago metro area, overall listings and sales have picked up pace. Suburban sellers have scored recent wins as investors gravitate toward more predictable property tax environments and cities with low inventory and high demand.
Earlier this month, developer The Opus Group sold a suburban complex known as Dash Downers Grove to Chicago-based investment firm Nuveen for $65 million or about $389,000 per unit.
The sale came on the tail of RentCafe releasing a ranking that tied suburban Chicago and Miami as the No. 1 multifamily markets in the country.
Meanwhile, results within downtown Chicago have been more mixed.
This week, JLL Income Property Trust sold its 28-story apartment building at 180 North Jefferson Street for $76.3 million. The price was 20 percent less than the $96.4 million it paid for the building in 2016. The 274-unit building sold for $278,000 per unit.
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