222 E Pearson filed for Foreclosure

Crain’s reports that PrivateBank & Trust Co. has filed to foreclose on the 219-unit conversion Pearson on the Park at 222 E. Pearson in the Gold Coast.

From Crain’s:

The bank alleges that the developer of the project at 222 E. Pearson St., an entity formed by Ganesan Visvabharathy, missed its February loan payment and failed to pay off the $6.8-million loan balance when it came due in March.

Attempts to reach Mr. Visvabharathy, who has a Ph.D. and is better known as Dr. Vish, were unsuccessful. The developer paid $46.6 million for the building in July 2005, when it was an apartment building. He borrowed $52.5 million from Hypo Real Estate Capital Corp. and $7.5 million from American Mortgage Acceptance Corp. to finance the purchase and his plan to convert the apartments to condos.

Those loans came due in August of 2007, and he refinanced the development with a new $17-million loan from PrivateBank. The loan carried interest of the prime rate plus 1%, or 7.25%, whichever is greater, according to a document included with the foreclosure suit, which was filed this month in Cook County Circuit Court.

To secure the loan, Dr. Vish pledged 55 acres of undeveloped land in downstate Mount Vernon and signed a personal guarantee. The loan originally matured last November but was extended to March.

The developer asked for another extension, to March 2010, a request PrivateBank had agreed to consider based on certain conditions, according to a letter the bank’s attorney sent Dr. Vish in April. Now, however, the bank just wants its money back.

Pearson on the Park is 80% sold but Crain’s reports that just 3 units have sold this year.

In recent months, the developer has cut prices in condos at Pearson on the Park by an average of 13%, but it’s unclear whether that will be enough to goose sales in the building. Downtown condo converters sold just 17 units in the first quarter, down from 62 in the year-earlier period, according to Appraisal Research Counselors, a Chicago-based consulting firm.

Streeterville condo conversion faces foreclosure [Crain’s Chicago Business, Alby Gallun, July 29, 2009]