Bank of America has pulled the plug on Chicago’s high-profile Waterview Tower with 
its filing of a foreclosure lawsuit against the 90-story condominium and hotel tower overlooking the Chicago River. The bank has sued to collect $20 million from the developer, an affiliate of Chicago-based Teng & Associates, which stopped construction last year.
The building’s troubles came to a head when Hong Kong-based luxury hotel chain Shangri-La Hotels & Resorts scrapped its plans for a 200-room hotel at 111 West Wacker Drive. Various contracts then filed claims totaling $85 million against the developer.
Bank of America’s lawsuit illustrates two critical rules of successful real estate development. First is the risk of starting a project without construction financing in place — in this case, funding a project with a short-term bridge loan while the developer was shopping around for a construction loan. Second is the issue of first loss position in terms of collecting money owed when a borrower defaults. Bank of America is in a first loss position since the contractors all signed their agreements before the bank extended the loan. This means their contracts could supersede the bank’s.
Tags: bank, Bank of America, borrower defaults, bridge loan, Chicago, Chicago River, Construction, construction loan, contractors, Development, Financing, foreclosure, Hong Kong, lawsuit, luxury hotel, real estate, Shangri-La Hotels & Resorts, Teny & Associates, Wacker Drive, Waterview Tower
Your post is very well crafted and I have learned so much about you interests and Bank of America. I
I found your blog on google and read a few of your other posts. I just added you to my Google News Reader. Keep up the good work. Look forward to reading more from you in the future.
nice article. I too see the this market getting much worse before it gets better for anyone…whether it be the banks or the homeowners.