December 23, 2009 - In case you haven’t heard by now, the AFL-CIO union pension fund lifeline that Shelbourne Development has been trying to grab onto has for the most part been severed. Garrett Kelleher of Shelbourne needs about $170 million to pay off liens and a loan from the Anglo Irish Bank to get the Spire fired up again. But despite expressing strong initial interest in backing this mega Chicago real estate project, four of the major union funds have decided to pass on investing in the loan.
Crain’s reports that Building Investment Trust head Michael Arnold likened their fund to any other lender and stated that they just couldn’t invest that amount at this time and in this housing market. Edward Smith of ULLICO, the union fund that had expressed the most interest in investing in the Spire, was quoted as saying that, “Unfortunately, these are just very difficult markets.”
With the 1,194 condos in the Spire just about 30% sold, most lenders are going to be wary of backing any type of construction loan for the project. Normally a 50% pre-sell benchmark has to be reached for a bank to issue a construction loan for a tower. The AFL-CIO unions were considering the loan because it would have insured that only union carpenters and tradesmen would be hired to do the work on the Spire, and it could have potentially created four or five years of jobs for members who are facing 30% unemployment rates right now.
With record numbers of Chicago homes for sale right now, most developers are scaling back projects or shelving them until the market picks up again. The 150 story Spire may be just more than any back is willing to bet on at this point in time.
Technorati Tags: Chicago Spire, Chicago Homes For Sale, Chicago Real Estate
