Waterton fund
buys unsold units in River West building
By:
Colleen Lobner April 06,
2011
Mondial, 900
W. Huron St.
(Crain's) — A
subsidiary of Waterton Associates LLC bought the 124 unsold units
in a River West condo building and plans to convert them into
apartments, a deal that allows the developer to extract himself
from the debt-laden project.
Waterton
Residential paid about $31 million for the condos at Mondial River
West, or about $250,000 per unit, in an all-cash deal that closed
Thursday. The 15-story building at 900 W. Huron St. has 141 units,
ranging from studios to four-bedrooms.
Sources say
the price is a premium above the balance of a note on the property,
which would make it a rare example of a struggling property
avoiding loan trouble.
Mondial
developer Jack Berger, principal of Citta Development LLC, didn't
return a call for comment, and Mark Stern, senior vice-president of
acquisitions at Chicago-based Waterton, declined to comment on the
status of the loan on the property.
With the
market firming up, Waterton's timing may be right, observes
residential developer Harry Huzenis.
“I think the
market is strong enough to absorb a lot of product for rental right
now,” says Mr. Huzenis, a principal with Chicago investment firm
JRG Capital Partners LLC.
Of the
Mondial, he says: “It's actually distinctive. The units are larger,
and it has a lot of nice features that renters are going to find
attractive.”
Mr. Berger
began marketing the project in 2006 but struggled to make sales as
the property buckled under the weight of a $38-million construction
loan that was scheduled to come due in June 2012.
Completed in
2009, the Mondial has had a turbulent history. By the fall of that
year, Mr. Berger had sold 48 units, but he canceled the contracts
and returned deposits with the intention of converting the building
to apartments.
He couldn't
land an equity partner for the conversion project, so he fell back
on the original condo plan. But only eight of the original buyers
remained.
During the
property's second stint on the market, Mr. Berger cut prices by as
much as 30% to counter the brutal condo market, but he managed to
ink just 14 contracts last year, property records show.
Related
story:
River West condo project mulls more
price cuts
The Mondial
units are the first acquisition for Waterton Residential Property
Fund XI, a $500-million multifamily investment fund that closed
early last month. Waterton owns about 15,000 apartments in 12
states.
“It fits our
urban strategy — buying properties in an urban location, close to
public transportation,” Mr. Stern says, citing the four-building
Presidential Towers as another example. Waterton bought that
apartment complex from the Pritzker family in 2007 for $475
million.
Mr. Stern
also is confident that the Mondial's switch to rental will be
successful because it will offer condo-quality finishes and
features, such as each unit having its own balcony, at
apartment-level rents.
Waterton has
not yet picked a company to rent the higher-end penthouse units, he
says.
George Kaplan
and Ben Friedman of Chicago-based Melvin M. Kaplan Realty Inc.
brokered the sale.
Read more:
http://www.chicagorealestatedaily.com/article/20110406/CRED03/110409938/waterton-fund-buys-unsold-units-in-river-west-building#ixzz1IkzAPOav
