Chicago Illinois Real Estate Blog

Condominium developer Terrapin Properties faces foreclosure lawsuits on two more investments: a residential development near Rockford and a block of condos its principals own in a River North high-rise.

The suits compound an already difficult situation for Chicago-based Terrapin, which was hit by a foreclosure suit in January over a 162-unit condo project in Kenosha, Wis., and is trying to find an apartment investor to buy a half-sold 298-unit condo tower in the South Loop.

Now, an entity controlled by the developer’s two principals is being sued by LaSalle Bank N.A., which alleges that they defaulted on a $3.8-million loan to finance the acquisition of 16 units in the Residences at Grand Plaza, a building at 545 N. Dearborn St. that Terrapin converted from apartments to condos.

Though Terrapin was bought out by its partner in the project, Deerfield-based Jaeger Equities Ltd., the firm’s principals, Michael Ezgur and James Geleerd, decided to buy the 16 condos for $5.7 million in May 2006. The entity that owns the units failed to pay back LaSalle after the loan matured March 7, according to a complaint filed in Cook County Circuit Court.

“I believe we’re going to be able to work this one out,” Mr. Ezgur says, declining to say anything else about the suit.

LaSalle, now owned by Bank of America Corp., also has filed a foreclosure suit against a company Terrapin formed to develop a 256-unit gated residential community in Cherry Valley, outside Rockford, according to an online search of court filings in Winnebago County Circuit Court.

It’s unclear how much the developer owes LaSalle, but a judge recently approved the appointment of Chicago-based Millennium Properties R/E Inc. as the receiver of the property. Millennium President Daniel Hyman declines to discuss the case.

Terrapin “is working closely with the bank” to find a solution, Mr. Ezgur says, declining to discuss details. “We’re doing whatever we can to cooperate with them.”

Terrapin, one of the city’s busiest developers during the condo boom, has already lost control of a site in the West Loop where it had planned to build a 530,000-square-foot mixed-use development. And the firm is in a tight spot in the South Loop, where it has hired a broker to sell a nearly finished 28-story condo tower at Clark and Polk streets.

With about 50% of the buildings condos under contract, Terrapin aims to sell the project, called the Residences of Burnham Pointe, to an apartment investor who will rent the units out, rather than sell them.

Terrapin is “working with a couple of potential buyers,” Mr. Ezgur says. He declines to identify them or say how much they have offered to pay for the building. Some observers doubt Terrapin will find a buyer willing to pay more than the roughly $98 million the developer borrowed to finance the project.
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