A Chicago bank that foreclosed on the developer of the 723-unit McLean Garden condominium project last month became its new owner yesterday, promising to finish renovations and to sell the project as soon as possible.
Continental Illinois National Bank and Trust Co. ended a four-hour auction of 460 unsold units with a $39.4 million bid, dashing the hopes of bargain hunters who attended the sale to try to snap up a unit at clearance prices.
The bank's purchase had been expected. Moments after Second Vice President Delbert Jones entered the final bid, a public relations representative issued press releases saying the bank had hired Richard Stein and Co., a Chicago-based real estate firm, to take over construction and sales at the project, situated on 43 acres along Wisconsin Avenue between Newark and Rodman streets NW.
Continental Illinois foreclosed on the developers of McLean Gardens last month after they defaulted on construction loans held by the bank.
Yesterday a bank spokesman indicated that the bid represented the amount of the outstanding construction loans but not the interest due on those loans. The bank also has prohibited the developer from releasing any financial information about the foreclosure under a recent agreement between the two parties in an attempt to forestall court suits.
The bank, which now hopes to recoup its money by selling the unsold units, said it will honor all existing sales contracts and reservations.
The audience of about 70 who attended yesterday's auction, held in a meeting room at the Sheraton Carlton Hotel, was laden with attorneys representing all parties to the foreclosure, current owners who were concerned about the impact foreclosure had on their property values, and bargain hunters.
Many of the units had sold earlier for more than $100,000, and some owners said they feared their property would be devalued if the remaining units were sold for markedly lower prices.
The 460 unsold McLean Gardens units included 124 that were finished and ready for occupancy and others in various stages of renovation. The bank was the only bidder on the unfinished units, but bargain hunters showed up to bid on the 124 completed units.
"It is a good bargain," said Sajda Solaiman, a Bethesda businessman, who said he wanted to buy four units as homes for his brothers and sisters. "These homes were selling for $120,000 to $130,000 and now they are selling for $60,000."
But Solaiman and about 10 other individual bidders lost out when Continental Illinois offered to buy all 124 finished units for $9.3 million.
Nearly 10 acres of undeveloped land along Wisconsin Avenue were withdrawn from yesterday's foreclosure and still belong to the Rubloff Co. and its partners. The developers have requested that this land be rezoned to allow four high-rise buildings to be built, a rezoning hotly contested by some McLean Gardens condominium owners.
Stein, which has a close working relationship with Continental Illinois, is converting to condominiums about 1,300 apartments at Buckingham Village in Arlington which, like McLean Gardens, was a long-time moderate-income apartment project.