Crain’s – Vultures looking to feast on bad loans

Crain’s Chicago Business (subscription required) is reporting that investment groups have been purchasing packages of mortgage loans on Chicago-area properties.

They’re only in it for the money, but big out-of-town vulture investors are doing their part to flush bad loans out of the local commercial real estate market.

Firms like Colony Capital LLC, Oaktree Capital Management L.P. and Lone Star Funds are picking apart portfolios of delinquent Chicago-area mortgages bought recently for pennies on the dollar from banks including MB Financial Inc. and M&I Bank. The decisions they make in the coming months will affect hundreds of local properties, from a warehouse in Skokie to an apartment building in South Shore.

Their goal is to turn a quick profit, whether by foreclosing on a loan or by reselling it to another investor. However the investors make out, they are playing a key role in the purging process.

One of the loans purchased, according to Crain’s, was on the development site at North and Clybourn outlined in the above aerial photo.

It’s not mentioned in the Crain’s article, but we’ve heard that an investor has been shopping the defaulted loans on the partially sold Museum Park towers. It would be a major surprise if the foreclosure process moves quickly on these properties.

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