Ladder Capital Provides $72M Acquisition Loan for Chi-Town Condo Deconversion


Strategic Properties of North America (SPNA) has scored $72 million in acquisition financing for the “deconversion” of Kennelly Square condominium tower in Chicago into multifamily rental units, Commercial Observer can first report.

Ladder Capital provided the 24-month floating-rate loan, which features two 12-month extension options, sources familiar with the transaction told CO. Officials at Ladder didn’t respond to a request for comment.

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Kennelly Square, located at 1749 North Wells Street, is a boutique residential condominium consisting of 268 units across two connected buildings, the 24-story Tower building and the nine-story Warehouse building. The property includes 4,000 square feet of ground-floor retail and its amenities include a pool and sundeck, a fitness center, a laundry facility and 140 enclosed parking spaces.

Meridian Capital Group’s Shaya Ackerman and Shaya Sonnenschein negotiated the debt, the transaction marking their fourth condo deconversion financing on behalf of SPNA in the past 24 months. Officials at the brokerage declined to comment on or confirm the lender’s identity.

SPNA paid $78 million for the property, according to Crain’s Chicago Business, and will spend a further $10 million renovating it over the next three years. The New Jersey-based developer is one of many savvy firms taking advantage of Chicago’s strong rental market to snap up condominium buildings and convert them to rental properties.

“We see a lot of upside in these transactions,” SPNA Principal Saul Kuperwasser said. “And as a product of Shaya’s expertise on these deals, his broad lens view of the entire capital stack, and his ability to continue to navigate our debt and investment needs, we are the largest buyer of these properties in the state.”

Many of Chicago’s apartment buildings were converted to condos during the 1970s and 1980s. As these properties age owners are often hit with significant repair bills which can transform into a special assessment if work is postponed, according to officials at Meridian. Securing financing for the deconversion process while there’s low cash flow and high repair costs can therefore prove to be somewhat tricky.

“In today’s real estate market, individual condominium values can be lower than that of stabilized apartments on a per-unit basis,” Ackerman said in prepared remarks. “The bulk sale of a condominium association to an apartment investor is extremely complex, but is beneficial for both sellers and buyers, as sellers receive a premium on their unit at closing and buyers receive a discount on standard apartment pricing. While terrifically challenging, this unique transformation will offer SPNA a significant return on their investment and bring the property under consolidated ownership.”