Whatever Happened to 400 N. LaSalle in River North?
The last time we chattered about the apartment-to-condo conversion high rise at 400 N. LaSalle in River North it was January 2008.
See our January 2008 chatter and pictures here.
Back then, some of the units were under distress.
Since then, the developer tried to sell the remaining units. If you read the Tribune, they had a prominent ad in the real estate section for several years featuring a caveman.
But awhile ago, the ad vanished.
So, what’s going on in the building?
Current conditions (out of 452 units):
- 13 for sale
- 6 for rent
Some units may be both for sale AND for rent.
One of the studios currently for sale, Unit #3106, is also in short sale.
You can see pictures of that unit here (to give you some ideas of the interior.)
There are washer/dryers in the units and parking is available (either for rent or purchase.)
But Crain’s finally got to the bottom of the story this week.
Apparently, the ad in the Tribune went away because 103 condos were bought in bulk by Steve Khoshabe’s Speedwagon Properties.
The deal, which sources say was just under $20 million, is by far the biggest of its kind in the city. Mr. Khoshabe’s deal-making also shows how some real estate executives who weren’t wiped out in the crash now have money to take advantage of the carnage and buy properties on the cheap.
Speedwagon’s price amounts to less than $195,000 per unit at 400 N. LaSalle St., a 45-story, 452-unit tower built in 2004. That price is about 30% below the roughly $279,000 a unit paid in 2005 by the previous owner group, a joint venture of Draper & Kramer Inc., J. P. Morgan Chase & Co. and Equity Marketing Services Inc., which sold about 350 units before the project stalled.
Mr. Khoshabe, 38, whose parents emigrated from Iran around 1970, says he can afford to wait. He also says one key in the 400 N. LaSalle deal was that almost all of the units are currently rented.
“We are not delusional about what the world is like for selling condos,” Mr. Khoshabe says. “Our No. 1 criteria for investing is a great location. No. 2 is it’s got to be rentable.”
Khoshabe’s condo play shows importance of timing in a rattled real estate market [Crain’s Chicago Business, Eddie Baeb, June 28, 2010]
No comments on this situation, but I wanted to make sure Sabrina saw the house featured in the Trib today. It appears that they’ve been reading CC: http://www.chicagonow.com/blogs/chicago-real-estate-getting-real/2010/06/french-provincial-palace—799000.html
“It appears that they’ve been reading CC”
the proprietor of that Chi-Now blog is a regular poster here.
I didn’t know that — thanks. Well, if they’re going to re-post a CC house, they couldn’t have picked a better one…
‘whose parents emigrated from Iran around 1970’ – gotta love the American dream. Especially when it includes $20MM deals.
Sounds like he is setting up to take the entire development back to apartments.
anyone know exactly how that would realistically happen. He may own 103 units but most are still owned by individuals. How does someone ‘take over’ a failing project if even 1 closing has already occured.
I’d hate to get that assesment bill…
“He may own 103 units but most are still owned by individuals. How does someone ‘take over’ a failing project if even 1 closing has already occured.”
2 different issues. He’s got about 1/4 of the building and so 1/4 of the condo board votes, so he has to deal with the owners. His one hot button would be any change in the condo dec to the rights of owners to lease their units.
If he had 451 of 452, he could either–1) afford to overpay a bit to take out the single owner and have total control, or 2) exercise total control while being especially protective of the single owner’s rights (to avoid a lawsuit), perhaps even not requiring payment of assessments by the 1 owner.
It’s a third problem if he owned say 300 units with 150 owners–too many to be especially solicitous of each of them, enough that they could be a real pain if they wanted to and too expensive to buy them all out.
My guess is he is going to buy out the remaining units. The mere fact that he owns 103 units means that any potential individual buyers would not be able to get financing anyway because neither Fannie or Freddie allow any single entity/person to own more than 10% of the units in a development.
“Mr. Khoshabe, 38, whose parents emigrated from Iran around 1970”
That seems like a weird detail. The 1970 part, I mean. It wouldn’t seem as jarring if it said “whose parents are Iranian immigrants”. Although I guess the writer is trying to differentiate his family from the (mostly quite wealthy) followers of the Shah who emigrated in the late 70s.
[/off topic musings]
“Although I guess the writer is trying to differentiate his family from the (mostly quite wealthy) followers of the Shah who emigrated in the late 70s.”
Very generous of you. I think you are assuming a degree of knowledge/insight/analysis typically lacking in Tribune reporters.
Reading this thread reminded me of this story…perhaps they emigrated on the same ship?
Both seem to be from the same loony tunes RE mental ward.
http://www.nypost.com/p/news/local/manhattan/tony_apt_now_barracks_ZeH0IZrgMYMVFaxu2fQwvL?CMP=OTC-rss&FEEDNAME=
I was under contract on a unit in this building last summer but the deal fell through because I couldn’t get financing since the building did not meet owner occupied % requirements. I was about as well qualified as a first time homebuyer could be and I still couldn’t get financing, so this building was doomed without this guy.
fred – best thing that ever happened to you
“Mr. Khoshabe, 38, whose parents emigrated from Iran around 1970?
If you read the article you will see that everyone involved in the deal (and company) are Jews, not Perisan/Iranians, which explains whey they left, they were Iranian jews.
Speedwagon was formed in early 2008 when Mr. Khoshabe and Jason Schiffman, a former employee at his mortgage business, teamed up with Jeffrey Perelman, an executive at the private-equity firm Sterling Partners. Steven Taslitz, Sterling’s co-founder and senior managing director, is an investor in Speedwagon.
Bob & homedelete….pay attention, this is how “ethnic networking” works in Chicago RE. They would never hire a gentile for this kind of thing, or give you guys the flyer on it either.
My daughter owns a condo in 400 N. LaSalle. She loves everything about it. Her 1BR unit is a great size with a great view and has very nice amenities. She did some upgrading, but it didn’t need much. She thinks the building amenities are excellent and the staff and maintenance do a great job. Most importantly, she loves that location. Not only is it very accessible to Mich Ave, the Loop, the Mart, the river area, etc., but the area is exploding with new nice restaurants, bars, new professional buildings and other venues. Many of her young friends are jealous that she lives there. I don’t know what this large purchase means, but when the economy gets a little better, that is a very desirable building and location.
Marilyn:
Did you ask your daughter if she is underwater?
Of course, she’s under water right now. Thousands of other condo owners in Chicago are under water now, too. But she loves it and has no plans to sell. It really is a very nice building and in a really great-and-getting-better location. She finds it more desirable now than when she bought it.
now that the construction is done at 300 N. Lasalle I’m sure the area is much better. I used to work around there and it was chaos. Oh and Kinzie and Lasalle is still the most dangerous intersection in Chicago, be careful around there!
How is the EL noise on the buildings west side?
Nice anti-semetic remark – “ethnic networking”. You need to get educated. Khoshabe is a christian.
My money is on Khoshabe losing additional money when he tries to sell in the future.
This real estate bust has been relentless and will continue to do so. Just when the smart money moves off the sidelines to make a good buy the market tanks again.
The RE market is so poised for a double dip. Mr. Khoshabe bought a few years too early.
“Speedwagon’s price amounts to less than $195,000 per unit at 400 N. LaSalle St., a 45-story, 452-unit tower built in 2004. That price is about 30% below the roughly $279,000 a unit paid in 2005 by the previous owner group, a joint venture of Draper & Kramer Inc., J. P. Morgan Chase & Co. and Equity Marketing Services Inc., which sold about 350 units before the project stalled.”
I love these quotes from The Great Crash: 1929 by Galbraith:
“A common feature of all these earlier troubles was that, having happened, they were over. The worst was reasonably recognizable as such. The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to ensure that as few as possible escaped the common misfortune. The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost. The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. (Not only were a recoreded 12,894,650 shares sold on 24 October; precisely the same number were bought.) The bargains then suffered a ruiness fall. Even the man who waited out all of October and all of November, who saw the volumne of trading return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or a fourth of the purchase price in the next twenty-four months. The Coolidge bull market was a remarkable phenonmemon. The ruthlessness of its liquidation was, in its own way, equally remarkable.”
Replace stocks with real estate. Just when the smart money thinks that $195,000 a unit is a good deal the price will continue to drop for the next twenty-four months.
Looking back at this bulk sale now…wasn’t so bad for the building, after all. I know a few people that own in this building and still absolutely love it.