Foreclosure Auction Set for Loop Office-to-Residential Conversion

The 17-story mixed-use building at 330 S. Wells St. in Chicago's Loop is scheduled for a sheriff's foreclosure auction on Nov. 3, after a Cook County judge ruled the loan was in default and allowed the sale process to move forward.

The property was converted from a 137K SF office building into 132 apartments, with about 24K SF of workspace and first-floor retail, by LG Development Group and Marc Realty. The project was completed in 2019 with a $27M construction loan from Regions Bank. An affiliate of Prime Finance refinanced it in 2021 with a $28.2M mortgage, which matured in February 2025 and went into default.

Prime Finance's subsidiary sold the loan in February to an LLC tied to Lindy Communities, a Jenkintown, Pennsylvania multifamily investor, for $15M, a discount of about 47%. As of early September, the total owed including interest was roughly $33.3M. Rising interest on floating-rate debt and slow rent growth pushed debt service above net operating income by the end of 2023.

Lindy's affiliate could apply the outstanding loan balance as a credit toward a winning bid. The parties did not respond to requests for comment.

For developers and lenders, the case shows how quickly conversion projects financed at near-zero rates can strain once debt costs rise.