The non-profit has defaulted on about $170 million in bonds it used to finance its acquisition of the flats a number of years in the past. It has been promoting off the properties in Chapter Court docket to repay traders that personal the bonds, however the proceeds from the gross sales have fallen nicely wanting what bondholders are owed.
That’s the case with the 4 properties BJB is shopping for. The Higher Housing Basis owes $60 million on the portfolio, however BJB is paying simply $42.2 million for it, which means traders which have owned the bonds since they had been issued in 2017 are going through steep losses.
BJB trumped an earlier pre-auction bid of $39 million from a so-called stalking horse bidder, decreasing the losses that many bondholders would have confronted. The agency owns 1000’s of flats within the Chicago space, with a portfolio that covers downtown, Lakeview, Rogers Park, Lakeview and different neighborhoods. A BJB government didn’t reply to requests for remark.
With the pending sale to BJB, the Higher Housing Basis now has used the chapter public sale course of to line up patrons for 4 of its 5 Chicago-area portfolios. The non-profit’s remaining property right here, a 345-unit housing advanced in south suburban Blue Island, is headed down the identical path.
Evanston funding agency Kinzie Belongings has agreed to pay $15.1 million for that property, Blue Station Flats at 2130 W. 122nd St., nicely beneath the $25 million in bond debt owed on the property, in keeping with a latest submitting by a trustee for traders that personal the bonds secured by the property. The Higher Housing Basis enterprise that owns the advanced plans to file for Chapter 11 chapter safety “shortly,” mentioned Andrew Brown, a Kinzie government.
Kinzie has been chosen because the stalking horse—a most well-liked bidder that agrees prematurely to purchase the property as a approach of setting a minimal value for different suitors—in an upcoming chapter public sale for Blue Station. So it’s doable that one other investor might outbid Kinzie for the property.
Kinzie owned the property beforehand, promoting it to the Higher Housing Basis for $18.6 million in 2018, in keeping with New York-based analysis agency Actual Capital Analytics. However the charity burdened the advanced with an excessive amount of debt.
“It simply turned too top-heavy,” Brown mentioned.
Brown plans to spend some cash to cowl deferred upkeep on the property however mentioned its working efficiency is ok, with an occupancy fee “nicely into the 90s.”
The quantity of bonds on which the Higher Housing Basis has defaulted has been corrected to $170 million, not $170 billion.