River City Condo Owners Voting Next Week On Sweetened Deconversion Offer

After two failed attempts, Marc Realty Residential has put in another bid to buy 448 condos inside Bertrand Goldberg's iconic River City and deconvert them into rentals. River City condo owners will vote Dec. 19 on whether they will accept a $100M offer, Crain's Chicago Business reports. If the association approves the offer, it would be the largest condo deconversion in Chicago during this real estate cycle.

Marc Realty submitted two previous bids for River City's condos. The condo association rejected a $92.2M offer in June 2016 — only 66% of owners voted in favor of deconverting. The latest offer breaks down to $273/SF, about 70% higher than the average for River City sales in the past 12 months.

Condo deconversions have become popular with investors because of the speed with which they can remodel the units and common areas, and bring them to market. Deconversions are especially popular in submarkets with little to no new apartment development, like Lakeview, where the condo association at Bel-Harbour condominiums agreed to Strategic Properties of North America's $51.5M deconversion offer last June.

Marc Realty's latest offer comes with a fair amount of risk. If River City's condo association approves it, Marc Realty will be converting in a packed downtown multifamily market that will see 8,500 new apartments coming online through 2019. But the offer indicates Marc Realty sees room for yield in a deconversion. Under Illinois law, 75% of River City's condo owners will need to vote in favor of deconversion in order to accept the offer.

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