By: David Lee Matthews October 01, 2013
A venture led by Starwood Capital Group is dumping its plans to build a small apartment project in Logan Square, putting the site up for sale in an apparent attempt to take advantage of developers’ growing interest in the gentrifying neighborhood.
The investment firm hired Chicago-based brokerage ACO Commercial to sell a vacant, nearly 18,000-square-foot site at 2489-2505 N. Milwaukee Ave., according to marketing materials. Greenwich, Conn.- based Starwood also hired ACO to sell 23 units it owns in a failed condominium project at 2504-2516 N. Willetts Court, about one block north of the development site.
The listing is an about – face for Starwood, which filed a zoning application in January to build 39 apartments on the site near the junction of Kedzie and Logan boulevards. But Starwood’s change in plans may indicate a desire to make a quick profit by taking advantage of developers’ growing confidence in the housing market housing market and increasing enthusiasm for the Northwest Side neighborhood. “Retail supports residential and residential supports retail,” said Gary Levitas of Wheeling-based Northfield Group Ltd., which is building 24 apartments at Whipple Street and Armitage Avenue.
Starwood, whose chairman and CEO is investor Barry Sternlicht, was one of the most active buyers of troubled loans during the recession. The company, which manages $20 billion in equity capital, led a group that paid nearly $2.8 billion in 2009 for the assets of Chicago-based Corus Bank, a failed commercial-real-estate lender.
But the Starwood venture has been cashing out. Mr. Sternlicht says he has doubled the value of the group’s $1.4 billion investment, according to a story Aug. 21 in the Wall Street Journal. A Starwood spokesman had no immediate comment.
Starwood acquired the Logan Square property through foreclosure last year after assuming a $9.4-million construction loan secured by the site, county records show. Whether the loan was part of the Corus Bank loan portfolio or was acquired separately could not be confirmed.
Starwood’s 23 units on Willetts Court, built in 2007, are a mix of one to three-bedroom apartments that rent for an average of $1.40 per square foot, according to marketing materials. The rentals include two eight-unit apartment buildings and seven of eight units in a so-called “fractured” condo project. Before the downturn, the units were part of a larger plan by Chicago based Paramount Homes, which wanted to build 18 more condos above first-floor retail space on the Milwaukee Avenue development parcel.
Paramount President Bruce Fogelson did not return messages seeking comment.
An executive of Chicago-based Madison Realty Group Inc., which partnered with Starwood to develop the Milwaukee Avenue site, did not return messages seeking comment.
ACO Commercial Executive Vice president George J. Toscas declined to comment.