A prime Chicago parcel that was the site of an ill-fated project to build North America’s tallest residential building may again have a chance to be developed, albeit on a smaller scale and by a different owner.
An Irish government bank is selling off a bad loan made to Ireland’s Shelbourne Development Group, the developers of the Chicago Spire, a source familiar with the matter said on Wednesday.
The loan, whose balance is $92.8 million, comes with the right to develop the 2.18-acre site on the bank of the Chicago River in downtown Chicago, the source said. The site, which is in one of Chicago’s most expensive neighborhoods, could support a $1 billion project, the source said.
The Chicago Spire, which was envisioned to have 150 stories, was designed by celebrity architect Santiago Calatrava. But Shelbourne saw the project run into financial trouble during the credit crisis and defaulted on the loan in 2010.
Anglo Irish Bank Corp, which financed the deal, was left with the bad loan, which was secured by the real estate. The Irish bank was nationalized in 2009 after collapsing, and Ireland’s National Asset Management Agency (NAMA), the bad bank set up to handle soured property loans made by the nation’s banks, is selling the loan, the source said.
A spokesman for NAMA could not be reached for comment.
The property, whose official address is 400 North Lake Shore Drive, offers unobstructed views of Lake Michigan. So far, much of the foundation and perimeter walls have been completed, but little else.
It is unlikely that a new buyer would resurrect the same project, the source said. But the site permits development for 1,200 condominiums or apartments. The site could support two or three buildings for 2.3 million square feet.
First-round bids are due in April. Likely buyers of the loan, which would entitle the owner to the site, would include investment funds, off-shore investors, real estate investment trusts or a combination of investors and developers, the source said.
Jones Lang LaSalle Inc is marketing the loan.
This could mark the third attempt in less than a decade to build a residential building at the site.
Christopher Carley, chief executive of Chicago condominium developer the Fordham Co, originally proposed the tower, then known as the Fordham Tower, in 2005 but failed to obtain the needed financing.
In 2006 Garrett Kelleher, executive chairman of Shelbourne, and owner of the St. Patrick’s Athletic FC football team took over the project, obtaining $69.5 million development and construction financing from Anglo Irish. Penalties and added interest have increased the face value of the loan.