Bank OZK has entered into a contract to sell a tract of land it took over from Sterling Bay that was once envisioned as part of the developer’s stalled Lincoln Yards megaproject.
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Chicago-based JDL Development is exclusively negotiating with the bank to purchase the site, sources told Crain's Chicago Business. Bank OZK gave the developer a 60-day window to vet the purchase before the payment JDL made to go under contract becomes nonrefundable, multiple sources told the outlet.
The bank made the move on May 2, and the contract is “subject to typical due diligence and closing conditions,” according to a filing with the Securities and Exchange Commission. If the deal goes through, the close should be on or before Sept. 30.
Bank OZK took over the land in March and transferred its $84M valuation to its foreclosed assets, according to the filing. A sale should result in “substantially no gain or loss,” the bank wrote in the filing.
The 28-acre parcel is bounded by the Chicago River to the west and south, North Kingsbury Street to the east and West Dickens Avenue to the north.
Bank OZK originally agreed to the Sterling Bay loan for the land in December 2019, and it was modified six times thereafter. The bank took multiple write-downs on the debt before ultimately taking control of the asset.
The quick potential deal doesn't come as a complete surprise.
On the company's first-quarter earnings call last month, CEO George Gleason said several parties had indicated serious interest in the property, adding that it had drawn “quite a bit of attention” since the bank took it over.
“This is a very valuable piece of land,” Gleason said on the call. “The city of Chicago is very interested in the outcome of this development because it's important to the city.”
Gleason also said it wouldn’t surprise him if “things moved on this fairly quickly” because of the value and importance of the land. He clarified that doesn’t mean Bank OZK will sell the land within the quarter because of its complicated interactions with the city, tax increment financing districts and city entitlements.
While under contract, JDL has a window to fundraise, assess the land and gather input from the city government on how its plans for the site fit within Chicago's guidelines and what the city council might approve.
Alderman Scott Waguespack of the 32nd Ward told Crain's that he had a preliminary conversation with JDL CEO Jim Letchinger and believes JDL understands “the market won’t bear what Sterling Bay was trying to do.”
Sterling Bay has had years of difficulty securing the financing needed to develop the site.
Though it might take a good amount of time for JDL to negotiate a new agreement with the city government over what infrastructure costs it will be responsible for, Waguespack told the outlet he is “hoping not to delay it for two or three more years by going back through a whole new process.”
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