Failed South Loop Condo Project Loses Appeal

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The site of the Columbian at 1160 South Michigan used to be sacred ground in Chicago.  The South Loop real estate was home to the Avenue Motel for decades, where it was a great example of ‘50s Americana style. There were high hopes for its restoration and potential landmark status, which didn’t follow through.

Then came the rumors that the site was to host a colossal jazz museum with the proximity to the Museum campus.  Yet, with undisclosed details the property was transferred to its current developer, Allison Davis and took off in a different direction.

The site became a 46-story, 220 unit high-rise of Chicago condos on the southwest corner of Michigan and Roosevelt.  Records show that the new construction launched by Mr. Davis in 2005, was financed with a $92 million senior loan from Chicago-based Corus Bank and an $18 million junior loan from Fidelity.

At the beginning of March 2009, the Columbian condo projected went south for Davis.  When the real estate market plummeted, his investment in the South Loop was no exception.

Defaulting on both loans, he eventually paid off the Corus loan and reached a forbearance agreement with Fidelity in July to avert full foreclose.  Reports disclose the agreement allowed Fidelity to repossess unsold units in the building in the case of any further defaults.

Less than six months after entering the agreement, Davis defaulted on numerous accounts and a Fidelity subsidiary promptly took over the unsold units that February.

As many troubled developers, owners, and investors did at the time, Davis took action and prompted suit.  Recently, the Illinois Appellate Court ruled against the Davis’ lawsuit for the defaulted $18 million loan.

The market is now in Fidelity’s favor.  When the Columbian was originally developed, Roosevelt Road lacked the retail development the area has today.

Appraisal Research Vice President Gail Lissner told Crain’s that “although the tower faces competition from buildings in the Central Station development nearby, it also stands to benefit from the prospective buyers those buildings will bring into the market.”