R
aphael Lowenstein's 312 Property Management is facing financial difficulties with several of its South Side real estate properties. According to loan servicer data, the company has fallen behind on payments for three loans tied to multifamily buildings in Bronzeville and Kenwood neighborhoods. The largest loan, a $31 million debt for the 116-unit Drexel Terraces, was taken out just six months before Lowenstein's delinquency began in August.

    The other two late loans are worth $15.4 million and $7.5 million, secured by buildings at 4520 South Drexel and 4612-4626 South Lake Park Avenue, respectively. All three properties are over a century old and were originated by Morgan Stanley before being sold to investors in commercial mortgage-backed securities.

    Lowenstein claims he is on track to resolve the issues and get back on schedule with his firm's commitments. However, the company has faced serious problems with city code violations at its properties, leading to reduced occupancy while repairs are made. With repairs nearing completion, the properties are expected to reach 95% leased.

    This situation highlights the challenges of investing in aging South Side buildings, where unforeseen issues can arise from old mechanical systems, deferred maintenance, crime, and rising taxes. Lowenstein's lenders are not alone in facing difficulties when a property's cash flow is diverted to fund repairs rather than debt service.

    Lowenstein maintains that his company is "in an excellent spot for future operations" and has a plan with its lenders to address the issues. However, tenants have previously reported problems at 312 Property Management's properties, including code violations and disputes over rent payments. The city of Chicago has also taken action against the firm, seeking to appoint a receiver to take control of one of its properties due to outstanding code violations.