Judge appoints receiver for Edgewater apartments

A second large Chicago apartment building has been put into receivership after its owner defaulted on a $43 million loan against the property.

The owners of the 223-unit Edison building at 5200 North Sheridan Road in the Edgewater neighborhood had to hand the property over to a court-appointed receiver after ignoring building code violations and missing a loan payment in June, Crain’s reported.

The suit is a rare case as of late for the Chicago area, where many office buildings have been in distress while multifamily properties mostly held or increased in value through the pandemic.

Although such lawsuits involving multifamily assets have been fairly uncommon recently, another apartment property was faced with the potential of foreclosure. An affiliate of Barings filed a $74 million foreclosure suit against Aventura, Fla.-based DLC Residential for a 13-story apartment building at 29 South LaSalle Street that’s 72 percent occupied.

On North Sheridan, a venture between Spirit Investment and Bascom Group bought the eight-story building for $21.6 million in 2015 with plans for a major renovation.

Ares Commercial Real Estate lent Spirit and Bascom $40 million in 2018, most of which was sold off to another lender and then packaged into a securitized loan offering in 2020. Shortly after that, the city of Chicago sued the owners for reported building code violations. When those weren’t fixed, it triggered a default under the loan agreement. When the Spirit and Bascom also missed a required loan payment, they defaulted a second time, resulting in the suit.

A judge appointed Chris Neilson from the Dallas office of Trigild as the receiver for the property in December.

Data from CoStar Group cited by the outlet puts the Edison at 91 percent occupied with rents ranging from $996 per month for a studio unit, up to $1,645 for a two-bedroom apartment, averaging to $1,241, or $2.29 per square foot for the building.

— Victoria Pruitt