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Quoted in Crains story after having prevailed in a similar lawsuit recovering

earnest money deemed non-fundable:


Pittsfield Building owners sued over soured $91 million in deals
A Texas developer who wants to buy the Pittsfield Building and convert part of it into a hotel has sued the
owners of the Loop landmark, alleging they misled him in a planned $91 million buyout of the property.
Yet a court battle over the 369,000-square-foot building could delay a redevelopment. On Nov. 20, a
venture led by San Antonio developer Adam David Lynd filed two lawsuits a few months after agreeing to
buy the tower in two deals, cases that could tie up the property and scare away other investors.
Yet the litigation puts the property in limbo, having the effect of preventing the sellers from just
walking away from the deals with Lynd and moving on to the next buyer, says Chicago lawyer
Bernard P. Edelman, managing partner at Edelman & Partners, who is not involved in the
litigation. The lawsuits also could give Lynd leverage seek a lower price for the building, he said.

November 25, 2015

Pittsfield Building owners sued over soured $91


million in deals
By Alby Gallun

The top of the Pittsfield Building

A Texas developer who wants to buy the Pittsfield Building and convert part of it into a hotel has sued the
owners of the Loop landmark, alleging they misled him in a planned $91 million buyout of the property.
Completed in 1927, the Art Deco tower at 55 E. Washington St. opened as an office building but was
partially converted to student housing and apartments several years ago. More recently, it has attracted
the attention of condominium and hotel developers amid rising condo prices and room rates.
Yet a court battle over the 369,000-square-foot building could delay a redevelopment. On Nov. 20, a
venture led by San Antonio developer Adam David Lynd filed two lawsuits a few months after agreeing to
buy the tower in two deals, cases that could tie up the property and scare away other investors.
In early August, Lynd signed a contract to buy the upper and lower floors of the Pittsfield Building for $36
million from ventures controlled by Miami Beach, Fla.-based Morgan Reed Group, according to one of the
complaints, which were filed in Cook County Circuit Court.
About a month later, Lynd signed another contract to pay $55 million for Fornelli Tower, a 177-unit student
housing property on floors 13 through 21, according to another suit. The venture agreed to buy the
student housing from an affiliate of Skokie-based Alter Group, which bought the space and converted
into student housing back in 2008.

Lynd accuses the Alter venture of fraud, alleging that it deliberately misstated that the student housing
space comprised 131,880 square feet, when it really covered 115,331, according to one suit. In the other
deal, the Morgan Reed ventures misled Lynd by saying the city would allow the Pittsfield Building to be
converted into a hotel, the other complaint says.
But Lynd discovered that wasn't true in a September meeting with Alderman Brendan Reilly (42nd),
whose ward includes the building, according to the suit. There were no permits issued or pending to allow
for a hotel redevelopment, and the alderman stated he would oppose any such zoning requests, the suit
says. Lynd would have to go through a very lengthy approval process with the city before embarking on
a hotel project, it says.
The Morgan Reed ventures fraudulently concealed their knowledge that Pittsfield could not be developed
as a hotel property and did not have express or even tacit government approval to do so, the complaint
says.
Alter and Morgan Reed executives did not return phone calls. Lynd did not return a phone call, and his
attorney declined to comment on the cases, issuing a brief statement instead.
My client would have preferred not to initiate litigation regarding this matter but felt it was necessary to
preserve its rights in the interests of its principals and investors, said the statement from David Kaminski,
partner at Chicago-based Daspin & Aument.
Lynd used to work at Lynd Co., a San Antonio-based developer run by his family that built the EnV
apartment tower in River North and owns a share of the office space in the John Hancock Center on
the Mag Mile. He left in 2014 and now runs his own company, EnVGroup.
Both lawsuits seek at least $1 million each from the sellers. They also ask a judge to extend the two
purchase contracts for 180 days after issuing orders for them to abide by the deals, saying the Lynd
ventures need more time to perform due diligence and raise money for the acquisitions.
Designed by Graham Anderson Probst & White, the Pittsfield Building was briefly Chicago's tallest
building after it was completed and has long been known for the jewelers that occupy its space.
Yet the building has become a lot more attractive to residential and hotel developers since the opening of
Millennium Park a block away, which has brought in tourists, and the emergence of the Loop as a place to
live. CBRE has been marketing the entire building for sale.
This is a rare opportunity to buy the full Pittsfield Building with Fornelli Tower, that are currently
separately owned assets, creating a ripe opportunity for an adaptive re-use of the property, a CBRE flyer
says. With the prime location in Chicago's East Loop, there are endless possibilities for repositioning this
asset.
A CBRE executive did not respond to requests for comment.
Yet the litigation puts the property in limbo, having the effect of preventing the sellers from just
walking away from the deals with Lynd and moving on to the next buyer, says Chicago lawyer

Bernard P. Edelman, managing partner at Edelman & Partners, who is not involved in the
litigation. The lawsuits also could give Lynd leverage seek a lower price for the building, he said.
It is at least the second time this year that Morgan Reed has been sued over the Pittsfield Building. In
April, an affiliate of another Miami Beach firm, Cambean Hospitality, filed a lawsuit against Morgan Reed
entities alleging that they failed to keep up their end of an agreement to develop part of the building into a
hotel.
That suit has been settled amicably, said Brian Scheinblum, Cambean's owner. He declined to discuss
the most recent lawsuits.

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-building-owners-sued-over-soured-91-million-indeals#utm_medium=email&utm_source=ccb-realestatereport&utm_campaign=ccbrealestatereport-20151125