T
PG Angelo Gordon has relinquished ownership of 2 West Delaware Place, a 31-story, 189-unit luxury building in Chicago's suburbs, after agreeing to a deed-in-lieu of foreclosure with lender ACORE Capital. The deal marks one of the city's largest multifamily foreclosures this year and highlights the turbulence in Chicago's commercial real estate market.

    The property was originally developed as condos but failed to sell, leading Angelo Gordon to convert it into a rental asset in recent years. In 2016, JDL Development acquired a bulk purchase of condo units with plans to renovate and resell them, but abandoned those plans after only nine units sold and decided to rent the units instead.

    The building's ownership has been marked by financial struggles, including an initial $104 million loan from Wells Fargo that was later refinanced into a $130 million loan with ACORE. The foreclosure highlights the challenges facing multifamily players in Chicago, which have seen an uptick of distress in recent months.

    Meanwhile, the suburban multifamily market is outpacing the urban core, with sellers scoring wins as investors gravitate toward more predictable property tax environments and cities with low inventory and high demand. A recent sale of a suburban complex to Nuveen for $65 million per unit reflects this trend, while results in downtown Chicago have been more mixed.

    The foreclosure also raises questions about TPG Angelo Gordon's decision to walk away from the asset, which may be driven by its recent merger or broader concerns about the Chicago multifamily market.