Hard sell for high-end senior living projects

Hard sell for high-end senior living projects


DAVID ROEDER

droeder@suntimes.com

Last Modified: Nov 16, 2011 06:04PM

This might have been the most audacious marketing concept of the housing boom: asking Grandma or Grandpa to put down close to $1 million for luxurious retirement living.

With seniors wanting to hang on to nest eggs, and often being unable to sell their homes anyway, the concept as it applies in downtown Chicago is undergoing a severe test. One senior high-rise has filed for bankruptcy and a similar project, still in the planning, is struggling with delays.

The Clare at Water Tower, a high-rise that opened in 2008 at 55 E. Pearson, filed for bankruptcy Monday. Its owner, the nonprofit Franciscan Sisters of Chicago Service Corp., defaulted on about $216 million in debt because only about a third of its 248 independent living condos are occupied. A spokeswoman said the sisters hope to keep control of the project. The bankruptcy filing said the sisters have secured about $12 million in financing for interim operations. Judy Amiano, president of the corporation, said “resident and health care services will continue uninterrupted” during the bankruptcy.

The project’s trouble is having an affect on the gut renovation of the landmark at 850 N. Lake Shore Drive, the old Lake Shore Athletic Club. The owner, Integrated Development Group LLC, needs to get a $110 million construction loan before major work on the senior housing project can proceed, said company President Matthew Phillips.

He said he hopes to finalize terms by yearend and deliver the building by 2014, but the troubles at the Clare haven’t make the task easier. Phillips said lenders are demanding more equity and buyers balked at upfront fees of $800,000 and higher, even if they were mostly refundable.

Phillips said Integrated slashed the fee to around $100,000, phasing in their refundability depending on how long a resident stays, and raised monthly fees for food, cleaning and other services. The building will offer 145 independent living units. Although Phillips said he’s taken deposits on only 26 of them, he’s scaled back his marketing because of the long construction time ahead.

SAINTS ALIVE: Ald. Robert Fioretti (2nd) said he’s blocking city consideration of a zoning proposal for a 22-story office building across from Old St. Patrick’s Church. The church owns the property at 625 W. Adams and has signed a development agreement with Alter Group Ltd. and White Oak Realty Partners LLC.

The team applied for zoning but Fioretti said the project got mostly criticism at a community forum he sponsored last week. “Basically, they didn’t do their homework and go to the community” in advance, Fioretti said. Questions arose over traffic and view and light obstruction. “Until they address these issues, this project isn’t going to go forward,” Fioretti said. A spokesman for the developers declined to comment.

It’s a surprising rebuke for the church, which values its role as a good neighbor, and the developers, who should have known better.

HONORING THE UNBUILT: Much-acclaimed architect Jeanne Gang has received a Holcim Award for Sustainable Construction for a building that hasn’t been constructed. Sounds like a neat trick, even for the recipient of a MacArthur Foundation genius grant, but let’s explain.

She won for her design of the unrealized Ford Calumet Environmental Center, which was to have used recycled material and operated off the power grid. The city project was planned for 134th and Torrence but at last check, about $10 million of the budgeted $27 million was lacking. Mayor Rahm Emanuel hasn’t shown an interest in reviving it, and he’s phasing out the department that championed the project.

Gang said that despite the award’s name, it’s supposed to draw attention and maybe funding to sustainable designs that show promise. “My opinion is it aligns very well with an administration interested in projects for the neighborhoods,” she said.

ON THE MOVE: Newcastle Ltd., a Chicago-based real estate investment firm that specializes in apartments and retail properties, hired Kent Swanson, 51, as its chief financial officer. Swanson comes to Newcastle from the John Buck Co., where he most recently was chief financial officer.

It’s the latest of several high-level departures from the Buck firm, known for building Wacker Drive office towers. “I think very highly” of the firm’s chairman, John Buck, Swanson said. But he said it was time to move on after 19 years.

Newcastle has a $500 million investment platform that has grown steadily. Michael Haney, Newcastle president, said Swanson brings “excellent relationships with lenders and capital partners.”

DOING THE DEALS: The two-tower, 1,031-unit Regents Park apartment complex at 5020 S. Lake Shore Drive sold for $159 million plus assumed debt to RP Holdings LLC, said the brokerage firm Holliday Fenoglio Fowler LP, which marketed it for seller Crescent Heights. ... Navistar leased 249,000 square feet at 1000 N. County Line Road in Elmhurst. Jones Lang LaSalle Inc and Colliers International were the brokers. … Gold fever is affecting retail. GoldMax, with more than 70 stores in the Chicago suburbs, said it plans to open 15 to 20 more next year.

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