Chicago Condo Directory

June 9, 2009 - We can’t even use the phrase “trouble in Shangri-La” because that hotel chain pulled out of the Waterview Tower. As you know, work ground to a halt months ago when Chicago real estate developer Teng & Associates ran out of money and was unable to find a lender to step up and finance the $400 million tower. Now with several contractor liens against it as well as a couple from Teng affiliates, Bank of America has filed a foreclosure suit to try and collect a $20 million bridge loan, according to a Crain’s article.

There may be no point to any of the liens or lawsuits however, because the article quoted a letter from Teng’s lawyer sent to Bank of America in April as saying that Teng was, “unable, due to lack of funds, to make any payment with respect to the indebtedness.”

On top of that frank confession, construction laws may dictate that the $85 million tied up in the over 30 liens already against the project be paid first before the bank loan, if anything gets paid at all. In fact, the building site and 26 floors of concrete parking garage may not have any value at all at this point. According to Scott Fradin, a lawyer who filed a lien for one of the contractors owed money on the project, it will be basically impossible for anyone to recoup anything owed on the development because there is too much debt and no investor with deep pockets to salvage the project.

High hopes of huge sales in 2006 prompted Teng to begin the 90 story tower with no construction loan on board. Even though the Waterview Tower had quite a number of sales, no bank would back a hotel condo project of that size in the dwindling market. This development may go in the books as the prime example of how not to build Pre-Construction Chicago Condos.

Technorati Tags: Waterview Tower, Pre-Construction Chicago Condos, Chicago Real Estate