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The wave of condo deconversions that swept over Chicago in the past few years seemed to crest last fall when the City Council tightened the rules governing such sales, which allow investors to buy condo properties and convert them into rental apartments. But Strategic Properties of North America, one of the most prolific of these investors, continues to expand its Chicago portfolio.
The firm, which has offices in suburban Skokie and Lakewood, New Jersey, just closed the $44M condo deconversion purchase of 21 East Chestnut Condominiums, a 163-unit condo property at 21 East Chestnut St. in the Gold Coast neighborhood, according to CBRE, which represented the condo owners in the transaction.
The company secured the right to make the purchase in October when it convinced more than 75% of the owners to support its bid, a requirement under state law. Starting this year, potential buyers of Chicago condo properties need to meet an 85% threshold.
SPNA also emerged this week as the buyer of 2 East Oak St., a 309-unit Gold Coast condo building, after another firm, ESG Kullen, convinced its owners last year to accept a $92M bid, according to Crain’s Chicago Business. But ESG had trouble securing financing, leading to a March agreement that SPNA will step in and pay the same amount to the condo owners.
SPNA has assembled a large portfolio of deconverted condo buildings on Chicago’s North Side, including Kennelly Square, a 22-story condo tower at 1749 North Wells St. in Old Town. The firm acquired its 268 units in 2018 for $78M, its third Chicago deconversion. The company had already bought the 133-unit Clark Place at 2625 North Clark St. for $35M and the 207-unit Bel-Harbour condominiums at 420 West Belmont Ave. for $51.5M.
SPNA interest in the Chicago apartment market goes beyond condo deconversions. Along with its partner, Los Angeles-based Integrated Capital Management, it also just purchased from DWS Group the 39-story Cityfront Place in Streeterville on the Chicago River at 400 North McClurg Court.
The acquisition was financed by investments from ICM and a Korean investment manager, along with a senior loan from Freddie Mac, according to ICM officials. The purchase price was not disclosed. Newmark Knight Frank represented SPNA in the transaction, and the seller was represented by CBRE.
SPNA officials say they plan to reposition the property, which was completed in 1991, by making improvements to both its common spaces and the residences as leases expire.
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