An article appearing in Crain’s Chicago Business yesterday focuses on condo developers struggling to settle their debts, warning that developers of high-rises with large numbers of unsold homes will likely default on their loans.
“Foreclosure may be unavoidable for the weakest projects,” the article says.
“When the condo market was hot, most developers easily sold enough to pay off loans at maturity, usually 2½ to three years after breaking ground, when most buyers closed on their units. But the market’s collapse threatens to reduce or wipe out developers’ profits, or force them to hand their projects over to banks.”
The Trump International Hotel and Tower, which has made headlines in recent weeks for a legal dispute between Donald Trump and Deutche Bank, is the most visible representative of the group of troubled high-rise developments, but the Crain’s article lists several others.
Two developments that Joe wrote about last week – Vetro and Library Tower – are mentioned in the article as two of the more “at risk” developments. According to Crain’s, just 43 percent of the homes in Library Tower and 57 percent of the homes in Vetro have been sold so far. Vetro developer Thomas Roszak told Crain’s that Roszak / ADC got an extension of more than a year to pay off its construction loan, but Lennar, Library Tower’s developer, is facing the fast-approaching deadline of Jan. 11 to pay off a $43.5-million loan owed to LaSalle Bank.
Sutherland Pearsall Development Corp, the developer of 550 St Clair in Streeterville, is also negotiating a second loan extension, according to Crain’s.