September 30, 2009 – The $20.2 million foreclosure suite filed by National City Bank probably comes as no surprise to most people who have followed the saga of X/O Condominiums. The bank claims that Chicago real estate developers Keith Giles and Jerry Karlik have defaulted on the $13.4 million loan they took out in 2005 to purchase the property, along with the added $19.1 million they borrowed in 2007 for pre-development costs according to an article in Crain’s.

X/O was to be two high-rise towers located on 1712 South Prairie with a total of 479 Chicago condos. Pre-sales began in 2006 but a local alderman bogged the project down by trying to limit the height of the towers. The resulting lawsuits weren’t dropped until 2007 and the housing market was too weak by then to support sales for such a large project. Marketing for the units stopped in 2008.

An unnamed bank representative told Crain’s that the X/O site was now probably not worth the original $13 million that Giles paid for it. The local property values have gone down dramatically and a new project is unlikely to be able to get zoning approval for another high-rise due to both neighborhood and alderman resistance. That means that with a shorter tower, fewer units could be built and profits would be reduced.

With lenders unwilling to finance construction loans on big developments until the housing market rebounds, it may be at lease a couple more years before we see more large scale Pre Construction Condos in Chicago.

[tags]X/O Condominiums, Chicago Condos, Chicago Real Estate[/tags]

This entry was posted on Wednesday, September 30th, 2009 at 10:47 am and is filed under Mortgage Information.