Shipka/Enterprise lose condo projects

The original developer of Palermo Palm Springs had to give up some of their Chicago properties. An article from a Chicago paper about the Shipkas, owners of Enterprise: "In a bold bet on the recovery of the downtown condominium market, a New York developer has taken over nearly 500 unsold units in three failed South Loop towers, the biggest distressed condo deal since the crash. Related Cos. aims to jump-start sales at the high-rises through a joint venture it recently formed with the lenders that financed them, part of the massive Central Station development at the south end of Grant Park. The projects have languished as the condo market has struggled to pull out of its funk, but Related executives are convinced that's about to change. “We're long this market and believers in it,” says Curt Bailey, president of the firm's Chicago division, Related Midwest. After six years of declining condo sales, numerous developer foreclosures and a big shift toward rental apartments, it takes conviction—some might say a leap of faith—to go long on condos today. Housing experts have called the bottom again and again, only to see condo sales fall further. Yet if Related is right, the deal will burnish the firm's reputation in Chicago, where it so far has avoided the missteps that have crushed some rivals. With a construction pipeline that includes two 500-unit downtown apartment towers, Related has established itself as one of the busiest developers of the post-bubble era. In the South Loop, the firm plans to reposition the three projects, built by a joint venture of local developers Gerald Fogelson and Ronald Shipka Sr. and Cleveland-based Forest City Enterprises Inc. Unable to pay back their construction loans, the developers agreed to a “deed-in-lieu of foreclosure,” voluntarily handing the unsold condos over to a lender group led by Bank of America Corp., which brought in Related as a partner to finish the projects.The biggest development is One Museum Park West, a 54-story tower at the foot of Grant Park on South Prairie Avenue, with 238 unsold condos. The developers also gave up 98 unsold condos in 1600 Museum Park and 157 units in Museum Park Place South, nearby in the South Loop. Shipka and Fogelson and Forest City did not return phone calls. Given the strength of the apartment market, other lenders and developers have opted to work around the condo slump by renting out unsold units. But that option didn't make sense at the three South Loop buildings, where so many units already are occupied by owners, Mr. Bailey says. Having owners and renters living in the same building can create complications and conflict." Miss Penny Lane says: With this news she's i the loop too.