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Legacy On The Park Get’s 60 Million Dollar Loan, We Can Sell You One Discounted Too!

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  - <em>Photo by Tom Rossiter</em> -  Photo by Tom Rossiter

(Crain’s) – The developers of a half-empty 72-story condominium tower overlooking Millennium Park have pulled off a rare feat in today’s depressed condo market, refinancing their project with a new $60.6 million loan.

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.

Yet the recapitalization wasn’t painless for Mesa and its partners, which had to kick in another $30 million of their own equity to get the new loan. The equity infusion and loan allowed the developer to pay off a roughly $91 million balance remaining on a $275.5 million construction loan issued in 2006. The loan was scheduled to come due at the end of the year.

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The loan gives Mesa something that developers need in the slumping downtown condo market: time to sell their units. Mesa has sold just 55 percent of the Legacy’s condos since the luxury high-rise was finished in 2009.

“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.”

Don Pafford, Chicago market manager for Minneapolis-based U.S. Bank Commercial Real Estate, says in a statement that “Chicago continues to be an important market for our bank, and the Legacy at Millennium Park is representative of our commitment.” Spokeswomen for U.S. Bank and Chicago-based PrivateBank did not comment beyond prepared statements.

Mesa also has tapped a new brokerage, Chicago-based @properties, to sell the Legacy condos, replacing Equity Marketing Services Inc., also based in Chicago. But Mesa and @properties don’t plan any major price cuts to boost sales.

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.”

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