Market Conditions: The Legacy Refinances But Can It Sell The Units? 60 E. Monroe
Crain’s is reporting that the developers of The Legacy, at 60 E. Monroe, across from Millennium Park, were able to secure refinancing.
A venture led by Chicago-based Mesa Development LLC borrowed the money last month from U.S. Bank and PrivateBank & Trust to refinance the Legacy at Millennium Park, a 355-unit project at 60 E. Monroe St. The $60.6 million loan allows Mesa to maintain control of the project in a market where so many developers have been cast aside by lenders trying to collect on unpaid loans.
But the building remains only 50% sold.
Since it is enormous, with 355 units, that means they still have to sell another 175 units (give or take).
“Buyers in 2012 are very sophisticated, they’re doing a lot more due diligence upfront, looking at building sponsorship and buying into a building on strong financial footing,” says Mesa principal James Hanson. “This gives us the term and flexibility we need to completely sell out the building.”
Mr. Hanson declines to disclose terms of the mortgage other than to say it is “long term.”
The loan could be a good sign for a condo market still struggling to get on its feet, though it may say more about the Legacy than it does about the market.
“Buildings with the best locations are impacted least and recover first,” says Gail Lissner, vice president of Chicago-based consulting firm Appraisal Research Counselors. “This could be a play by the banks, expecting that when the market conditions do return, the Legacy will be at the forefront of that wave.”
As we’ve seen with some of the other luxury high downtown high rises that are not sold out- there are no plans to sharply lower prices. The prices are, what the prices are.
The remaining units in the Legacy range from a one-bedroom condo listed at $358,800 to $5.5 million penthouses. Michael Golden, @properties co-founder, says the new brokerage “made some adjustments in pricing,” but not cuts across the board. The Legacy’s listing price per square foot averaged $600 since the second quarter of 2008, according to Appraisal Research.
“They were able to successfully sell at the pricing they’re at and, we feel, (are) priced appropriately,” Mr. Golden says.
An improved economy would help sales, helping to change the pessimism prevailing among buyers today.
“Most of the people we sell to, I don’t think they’re worried about losing their job,” says Mesa founder Richard A. Hanson. “It’s a question of confidence.”
How many years will it take to finally sell out this building?
Does this location command a premium for buyers versus, say, buying in Aqua, 10 E. Delaware, the Ritz or 2520 Lincoln Park (all newish construction as well)?
Legacy’s Luck: Luxury tower refinances with $60 million loan [Crain’s Chicago Business, Dave Matthews, February 8, 2012]
Let’s see what happens to assessments when the developer has to turn over control to the HOA which should happen in September. I have a feeling the units for sale are going to become a whole lot less marketable.
No, this building does not command a premium over those other buildings. That is why 1 bedrooms in 10 E Delaware sell from the high 400 to low 700s and they are asking (closings haven’t started yet) 1.3+ million for the 1 bedrooms in the new Ritz.
Aqua is a unique flavor. I wouldn’t buy in a building that combines rentals and a hotel and shares amenities but many people love the building.
This seems expensive to me at 600 sq foot. Seems like you can find many building in the Trump at 500 sq. ft or atleat 600 sq ft. I consider that to be a far superior location as it is walkable to much of River North which is more lively. The Legacy is in a very boring area after 5 pm.
“How many years will it take to finally sell out this building?”
Well, closing began in late 2009, so it’s taken them over 2 years to sell just half of the building. Given the market for condos in downtown, the prices of the condos, the fact that most of those interested in this building already have bought, I’d say another 4 years if they do not cut prices.
“Does this location command a premium for buyers versus, say, buying in Aqua, 10 E. Delaware, the Ritz or 2520 Lincoln Park (all newish construction as well)?”
I wouldn’t think so. Each of those buildings is in places with its own particular benefits and drawbacks. I’m not sure that any area would be considered more desirable than the others, but if anything I think people would prefer the Gold Coast or Lincoln Park to living in or immediately around the Loop.
I have considered living here down the road as its a beautiful building walkable to many gigs but the neighborhood just sucks. Ideal for workaholics who aren’t interested in any sort of nightlife and aren’t foodies I suppose.
We seriously considered Legacy. Positives are: views, finishes, amenities.
Negatives are: electric heating which will be very expensive, most units have 2008 pricing which is unreal for 2012, and I am not too crazy about the location. It is just too much in the middle of tourist action. Between this, aqua and MPE, my rankings considering location, amenities, state of the building, views and all are: MPE, Legacy, Aqua.
BTW, someone mentioned Aqua is a unique flavor. It is true but it is not a good flavor. I was so disappointed at how unimpressive the finishes were and the whole sharing the building and its amenities with the hotel and all the rentals ruins it for me.
you guys are very funny – the time to buy was 2011 – prices were at their lowest. Right now, anything that is a deal in a good area is selling VERY fast. Properties that are OK (price wise) are going under contract within weeks. Any chance of getting a steal is over (too many people ready to pounce) – don’t take my word for it – look at what has gone under contract in the past few weeks – and the spring market isn’t even here yet. Tick tock…..
Well Clio, everything I am interested in is languishing in the market so I guess I just have bad taste and like not so hot properties : )
“Well, closing began in late 2009, so it’s taken them over 2 years to sell just half of the building.”
They can continue to do this because interest rates on the debt are so damn low! Even this new refinance rate is probably low. It just goes to show that government involvement in the markets (this case, Fed’s ZIRP) keeps the market from “clearing” or finding a bottom from which we could start a real recovery. I’m sounding like Rick Santelli.
Buy now or be priced out forever! Real estate only goes up! You have to get on the property ladder! Stop throwing your money away on rent! UIClio researched it!
“and the whole sharing the building and its amenities with the hotel and all the rentals ruins it for me.”
Who wants to look at cranky old-hag unit owners? Give me the hotel guests and the renters to look at around the pool and in the gym. Liven up the place.
“The Legacy is in a very boring area after 5 pm.”
No way! Maybe after 9pm on a weekday, but its not a boring area… you do realize you have the best park right nearby, the theatre district and a lot of amazing restaurants a short drive/cab/bus/el ride away right?
yes the immediate street kinda blows but to say theres nothing to do here but work is nuts
There’s nothing there but Twisted Kilt and Miller’s pub. I guess you could join the Union League club and hang out over there, that place has a good bar, and lots of great programs, events, etc.
the gage and henri
mercat a la plantxa
I imagine it’s nearly impossible to get to River North restaurants from this location.
“They can continue to do this because interest rates on the debt are so damn low! Even this new refinance rate is probably low. It just goes to show that government involvement in the markets (this case, Fed’s ZIRP) keeps the market from “clearing” or finding a bottom from which we could start a real recovery. I’m sounding like Rick Santelli”
So you think it would be a good Fed policy to tighten the money supply right now? That would be a genius move, in the same vein as Hoover.
I can’t understand why mesa threw in 30mm equity on the loan. That’s 200k/unsold unit they could’ve cut to almost definitely get out of this quagmire. Talk about throwing good money after bad.
“There’s nothing there but Twisted Kilt and Miller’s pub. I guess you could join the Union League club and hang out over there, that place has a good bar, and lots of great programs, events, etc.”
You have no idea what you are talking about, the University Club is attached to this building!
“So you think it would be a good Fed policy to tighten the money supply right now? That would be a genius move, in the same vein as Hoover.”
Yes. It needs to be done, because we have a distorted and phony economy, that’s running massive deficits. It can’t continue and throwing money to prop it up (Keynesianism) isn’t going to work in the long run, the problem is too large now. They never should’ve intervened and done the bailouts in 2008, now the problem is even larger, making it even more difficult to stop! The Fed spigot never should’ve been turned on in 2002 after dotcom crash and 9/11, that’s when the imbalances could’ve been addressed before they’ve gotten to this point of no return.
I don’t have time to argue economics. I’ll just leave at we disagree and I’m not alone in the world of economists.
Actually as part of the amenities the residence gain access to the club’s facilities but they have to pay of course. I think they have squash courts and what not.
“You have no idea what you are talking about, the University Club is attached to this building!”
I like how Gail Lissner thinks the market will snap back seemingly any day now. I also like how the lender sharply cutting their exposure is a sign of financing strength the way this is written.
Does Mesa realize when this building starts to hit the 5+ year mark their main competition won’t be Aqua or Trump but resales (some of whom CAN cut price).
The more I analyze this situation the more the shit stinks. LOL.
This is an office building. Terrible idea to convert to high end condos. Dumb dumb dumb.
“Let’s see what happens to assessments when the developer has to turn over control to the HOA which should happen in September. ”
good call bob 🙂
i dont see this one ending well, i feel for owners in aqua too.
even if the market picks up steam aqua and legacy dont have a pretty future.
“This is an office building. Terrible idea to convert to high end condos. Dumb dumb dumb.”
Dude, this one is new from the foundation up.
Totally thinking about the wrong building–prolly 55 E Monroe.
“I also like how the lender sharply cutting their exposure is a sign of financing strength the way this is written”
Loan was due, and they (effectively) extended and likely reduced the cost. A year ago, no way that kicking the can with a new loan would have happened, even with an extra 25% “equity”.
“helmethofer (February 9, 2012, 9:55 am)
There’s nothing there but Twisted Kilt and Miller’s pub. I guess you could join the Union League club and hang out over there, that place has a good bar, and lots of great programs, events, etc”
I don’t love the area, but there is actually a fair amount around here. The Gage, Henri, Attwood Cafe, Rosebud Prime, Heaven on 7 and just a couple blocks north you are at Aria, the stuff at the Wit, McCormick Schmidt, etc etc. The location is closer to more bars and restaurants than my location and I live in River North.
“Totally thinking about the wrong building–prolly 55 E Monroe.”
goes that thing is ugly,
i respect the logistics of building it and what went into making it essentially and entirely separate building on top of a building, but dang its realy really FUGLY
“This is an office building. Terrible idea to convert to high end condos. Dumb dumb dumb.”
The only one dumb here is you, this is an entirely new building, built from the ground up… They kept the historic facade though which I think is really cool.
“I’m not alone in the world of economists.”
you’re with the economists that led us to where we are.
“They were able to successfully sell at the pricing they’re at and, we feel, (are) priced appropriately,” Mr. Golden says.
I wonder why nobody’s picked up on this comment. Obviously if Mr. Golden had told Mesa and the bank they weren’t priced appropriately, they wouldn’t have been hired!
I think he is talking about 65 E Monroe.
“This is an office building.”
I looked at some Legacy unit a couple months ago. Views are great, finishes are so-so, prices are too high, and the location is inconvenient for everything but walking to work.
One thing this building really did right is that indoor pool. In the few buildings that have one it looks like a slapped on afterthought (ie 65 e Monroe’s pool next door). Whereas this one looks like a nice health club’s pool, even if only two lanes.
The pic for this thread shows quite the mix of building styles.
” I wouldn’t buy in a building that combines rentals and a hotel and shares amenities”
Four Seasons Private Residences?????
tick tock…..tick tock…..
depending of course on whether it’s the rentals or hotel that bothers you, And how you define a 2 month stay as rental?
“tick tock…..tick tock…..”
Is that the new Clioism to replace “I went to UIC, Stamford, and Hartford”?
So nice to see you so completely and deservedly discredited.
uhhh -ok, once and for all, I went to U. of C., Harvard and Stanford – and remember, just because someone says something on cribchatter doesn’t mean that it is true.
UIC, Hartford & Stamford Clio. Stop embellishing.
I’m outta here
“uhhh -ok, once and for all, I went to U. of C., Harvard and Stanford”
Did you also attend any *other* post-secondary institutions? Besides the drunk tank, that one time, of course.
Whatever your answer, I’ll keep the following in mind:
“, just because someone says something on cribchatter doesn’t mean that it is true.”
Guys – stop picking on Clio. I knew this guy (Western Illinois undergrad) who went to one of those one week Executive Education programs at the Kennedy school at Harvard who claimed to be a Harvard grad and would refer to himself as a “Harvard man.” Even bought a Harvard ring.
“Guys – stop picking on Clio. I knew this guy (Western Illinois undergrad) who went to one of those one week Executive Education programs at the Kennedy school at Harvard who claimed to be a Harvard grad and would refer to himself as a “Harvard man.” Even bought a Harvard ring.”
I think you can go to the bookstore at U of C. Buy a t-shirt. That would technically make you a U of C grad. Don’t even need to visit the crappy part of town. Bookstore on Mich Ave will get the job done.
…and Miu mentioned that 95% of her High School in Hong Kong got accepted into Stanford. So that’s like a safety school. Yawn!!
speaking of Hong Kong and Harvard, ever drink one of those scorpion bowls at that place near campus? hazy memories….
“you guys are very funny – the time to buy was 2011 – prices were at their lowest. Right now, anything that is a deal in a good area is selling VERY fast. Properties that are OK (price wise) are going under contract within weeks. Any chance of getting a steal is over (too many people ready to pounce) – don’t take my word for it – look at what has gone under contract in the past few weeks – and the spring market isn’t even here yet. Tick tock…..”
The market is set to do the ultimate little head fake as the banks keep millions of homes off the market, creating a supply shortage in an overbuilt highly distressed market (imagine that) and using our taxpayer dollars to do so. Then even more suckers will be pulled in out of the few holdouts lucky enough to have not bought yet, or have actually built up their financial position during the recession. Maybe the CS index will go up a few points, once that is in, it’ll be bombs below. Especially as interest rates and taxes go up. Who will be left? Who will take on the billions in not trillions in value as the baby boomers downsize or die off? Marginally employable grad students with $200k debt loads? If a 30% drop in RE values occurs while the government is propping up the market in 10 different ways, what happens when reality takes hold? CS is going to 85 or lower. Bwah ha ha ha.
“I think you can go to the bookstore at U of C. Buy a t-shirt. ”
i had a michigan st. sweater when i was in HS. the most comfortable sweater (outside of cashmere) i ever had.
So going by Clio’s logic….
….. i went to Michigan St.-JuCo-UofI-and Looney Tunes U
@ vlajos
You don’t have to point to Hoover to see how shortsighted tight money is in this environment, look at Europe. That 2011 ECB rate hike sure did wonders.
JM, I know, but it’s easy for people to understand.
yes clio, I am certain that the government rewarding bad behavior (not just borrowers but lenders too!) is going to do wonders for the fragile housing market! http://tinyurl.com/7j7atnd
I also love the 8% approval rating on the thumbs up/down scale of this bill… jeez
Brad F not even sure rates will or need to go up to cause this. The oldest boomers turn 66 this year and I doubt they’re all gymrats like that juicer guy. For the baby boomer generation, at least the earlier ones waiting it out for the market to turn won’t be an option. There’s only a finite number of years on this mudball and many will move to Florida/Arizona whether their financial house is in order or not.
“JM, I know, but it’s easy for people to understand.”
most people hear Hoover and think vacuum, not president
Personally I think it all comes down to a personal taste. We had looked at the Aqua, and the Legacy. The views, finishes were really nice in the Legacy. The whole building really had an expensive feel to it, but your paying $800 in association fees, and it has not even been turned over the association. The unit had a Wolf and Sub Zero appliances and electric heating, which was going to be super expensive, but the amenities were ok. The great thing was the University Club being attached to the building, but to gain membership you have to pay $250 a month to use their facilities. Which, was too expensive for us. Where in the Aqua, the view was great, the balcony wraps around the unit, the amenities were awesome, but the unit’s finishes were horrible and low quality. But even though your sharing the amenities with renters and hotel people, i know other people that live there and they even said its not that bad or overcrowded. So we ended up purchasing in the Aqua.
“(Keynesianism) isn’t going to work in the long run”
Keynesian economics is not designed to deal with the long run. But as Keynes pointed out “In the long run we are all dead.” And for the short run, Keynesian economics is very suitable.
Getting the economy out of a depression (and we are currently in a little depression), unless we want to stay in the depression for a long time, is a short-run problem, . And when the economy is depressed, a stimulus to aggegate demand, from expansionary monetary policy, or expansionary fiscal policy, or preferrably a combination of the two is the appropriate remedy.
I live here, and the heating is very expensive. Baseboard electric heat only. My 1 bedroom unit costs me ~$300/month where my previous apartment was MAYBE $30/month. Thankfully the cooling is provided by the building, so at least the summer will be cheap.
They also have limited hours in which you can get your packages. For those who work late, too bad. You can wait 5 days and pick up your packages during a small window on Saturday. Considering this is a “Luxury” building, I expect to be able to pick up my packages on my schedule.
At least American Invsco got that one right!
Thanks for your information lola and a. I thought the electric heating will be a major negative point for Legacy but good to put some numbers to it. Lola has the hotel opened in Aqua yet?
has the hotel opened in Aqua yet?
Yes: http://www.radissonblu.com/aquahotel-chicago
Wait – my 8 year old takes online math courses from Stanford. Does that mean I can put a Stanford alum sticker on my car now?
“Does that mean I can put a Stanford alum sticker on my car now?”
Nonono. You need the Stanford Mom sticker:
http://stanford.cbscollegestore.com/store_contents.cfm?store_id=28&dept_id=875&product_id=61159
Thanks anon. When we saw units in Aqua the hotel had not opened yet and I was curious to see what impact it would have on the amenities.
“Does that mean I can put a Stanford alum sticker on my car now?”
Even better! That sticker officially makes your car a Lamboghinhinhi.
In other news they just did an MLS dump and there are like 100 properties from this building now listed over the past few days. I guess they’re actually interested in selling the units. But no custom pictures of each one LOL.
And the cheapest unit at 359k went under contract at long last. I don’t think it includes parking though, but it’s likely a comp killer for 1-bedrooms as its a 1 bedroom, 1.5 bath. The developer wants 480k for just the 1/1s.
I noticed the Legacy had a new full-page ad in the Trib RE section.
…on Sunday.
The building just got its financing (as we chattered about) and now has a new marketing group. It’s the same group at @Properties that sold out other downtown buildings during the Great Recession.
@miumiu yea it has its beautiful!!!!
Thanks Lola. I am tempted to stay at the hotel for a weekend to check things out : )
I’m changing my posting name to StanfordMom.
Unit 2106 had a 20k price cut yesterday and is now listed at 339k.