January 26, 2008 – The troubles began for WMC Development IV and Ashton Lofts months ago when construction lagged behind schedule, pushing back delivery dates and prompting some buyers to default on their contracts. Then in October of last year the development’s lender, LaSalle Bank, began foreclosure proceedings to collect the $5.3 million loan that was past due. Now, according to an article in Chicago Real Estate Daily, WMC has filed for Chapter 11 bankruptcy on the 1610 West Fullerton Avenue development.
Construction on Ashton Lofts is complete, and stats from December showed that 19 of the 39 units had either been sold or were under contract. For those who purchased a condo at Ashton Lofts in Lincoln Park and actually did close, the bankruptcy will have no effect. A spokesperson for WMC said the number of buyers who had backed out of contracts had been high enough that the developer wouldn’t be able to repay the loan to LaSalle. The original maturity date of the loan was June 1, 2007. WMC managed to renegotiate for a September deadline but wasn’t able to meet that either. Add in the weight of a market slump and a struggling development can easily crumble.
Foresight Analytics states that defaults on construction loans in Chicago were up to 3.3% in the third quarter compared to 1.8% in the same quarter of 2006. Predictions are for more foreclosures as developers find it more difficult to sell new Pre Construction Condos in Chicago.
[tags]Ashton Lofts, Chicago Condos, Chicago Real Estate[/tags]