Condo Deconversion Specialist Hung Up On Dearborn Street Deal

by NEW YORK DIGITAL NEWS


Chicago’s biggest condo deconversion buyer is coming under pressure from would-be sellers to act faster on the latest deal to drag on as the market slides.

After failing to close a $190 million deal to buy a 467-unit River North tower in a bulk condo buyout earlier this year, Strategic Properties of North America is now upsetting condo owners at a different property in the Loop. A critical mass of owners of the 310-unit property at 200 North Dearborn Street who approved a $95 million deal with Strategic Properties more than a year ago are getting restless as the sale remains pending amid soaring interest rates and a general market slowdown.

“These buyers went from being sophisticated deconversion specialists to complete jokes,” said Jon Taylor, the owner of a penthouse unit at 200 North Dearborn who’s fed up with the deal. “They still haven’t been able to secure funding, despite it being 15 months now.”

Strategic — which is led by principals Yitzy Klor and Saul Kupperwasser and has offices in Skokie and Lakewood, New Jersey — didn’t respond to requests for comment, and neither did an attorney representing the men and the firm.

At 10 East Ontario Place in River North, the condo association’s board of directors this summer killed the $190 million deal it made to sell the 467 condos in bulk. The move came after years of negotiating and waiting on Strategic, which couldn’t come up with the money to close the transaction before the sellers’ condo board pulled the plug. 

Now some unit owners at 200 North Dearborn are pushing their condo board to take similar action.

“If you want an option in a stock market, you have to pay for that, and here [Strategic] is basically getting more time for free,” said Brent Junge, whose son owns a unit at 200 North Dearborn. “I’d love to be able to tie up all kinds of property or stocks with the right to buy at its current price at any time in the next 10 years. I’d love to be able to get an option for free.”

Junge and his son have opposed the deal from the outset, as the son wants to keep living in the unit. 

Other sellers on North Dearborn have indicated they want the condo board members to force Strategic to meet tougher obligations — such as putting up additional nonrefundable earnest money — in order to keep the deal alive. Attorneys for the condo board did not return requests for comment.

Separately, an investor in a previous Strategic deal who’s suing the firm is running out of patience with what he claims are purposeful delay tactics the landlord is using in the court case. The investor, Ari Haas, sued Strategic, Klor and Kupperwasser in Cook County court in 2020, claiming they shorted him out of his fair share in the 2018 sale of a 496-unit Lakemoor apartment property for $65 million.

Last month, Haas made a motion for the court to sanction the company and its executives for being unprepared for a court-ordered deposition of the landlord’s representative that took place earlier this year. Haas said the representative, named Ahu Landsman, dodged questions on at least 16 of the 17 topics he was supposed to be ready to answer during the interview. Landsman is listed as an associate in construction management on Strategic’s website.

It’s not the first time Haas has had to rely on the court to get Strategic to share materials relevant to the case.

“For years, defendants have ‘hid the ball’ from plaintiffs, hiding the nature of distributions and various contracts and records,” Haas said in a court filing, noting that the court has made multiple orders compelling Strategic and its executives to produce relevant materials such as banking records and business operating agreements with the plaintiffs.

However, Strategic, Klor and Kupperwasser responded by alleging that Haas intended to take issue with the deposition before it even began.

“You came to the deposition with this strategy — to notice only broad topics and then to seek deposition testimony on extremely specific topics,” Noah Siegel, an attorney for the firm and its executives, wrote to Haas’ legal team in September, according to public records. “We suspect this was done to further the litigation strategy you’ve sought thus far: creating the mere illusion of discovery noncompliance without actually addressing the merits of the case.”

Haas’ lawsuit claims the entity he entered with Strategic that owned a stake in the suburban Lakemoor property was owed $4.5 million out of the 2018 sale’s proceeds, and his company Monticello Investments would have gotten a 20 percent split of that figure. Yet it claims it only received $238,000, according to court documents.

Legal filings show that Strategic and its executives have made a settlement offer in the case, but the lawsuit is still moving through court. A judge this month ordered Strategic to have another one of its representatives redo a deposition, and the court won’t rule on Haas’ motion for sanctions over the uninformed initial interview with Landsman until the next one is complete.

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