Foreclosure Auction Set For Loop Office-To-Residential Conversion

An affiliate of Prime Finance refinanced the construction debt in 2021 with a $28.2M mortgage, according to court documents. Prime Finance's subsidiary sold the loan to Lindy's affiliate for $15M, a 47% discount, according to Cook County records. That price says more than any press release.

In 2018, LG Development Group and Marc Realty began converting the 137K SF office building into 132 apartments with 24K SF of refurbished workspaces and first-floor retail, taking out a $27M construction loan from Regions Bank. It completed the conversion of the nearly 100-year-old property in 2019. Easy to announce, harder to underwrite.

An affiliate of Prime Finance refinanced the construction debt in 2021 with a $28.2M mortgage, according to court documents. The loan matured in February 2025 and was declared in default after the borrowers failed to pay it off, according to court documents. Prime Finance filed a lawsuit in Cook County court against an affiliate of LG Development in May 2025.

Debt service on the property of $2.4M outpaced net operating income of nearly $1.9M by the end of 2023, even though occupancy was at 97%, according to Morningstar data. Debt service was up almost $1M from the end of 2022 to the end of 2023.

Special servicer Situs Holdings began overseeing the loan in August 2024, according to Morningstar commentary. Servicer commentary from that month said the debt service coverage ratio fell below 1 due to an increase in debt service obligations with "stagnant rents."

As of early September, the total amount due, including accrued interest, was about $33.3M.

If Lindy Communities acquires the property at the foreclosure auction, it can apply the outstanding balance on the loan as a credit toward the purchase price, according to court documents. The sheriff's auction is set for Nov. 3.

Lindy Communities owns about four dozen multifamily properties across the country, including four others in the Chicago area.

Ask your lender: if your floating-rate loan reset today, would your debt service still be covered by net operating income?