Debt tied to office buildings in Chicago’s Loop is set to be sold for a loss as major tenants BMO Harris Bank and law firm Chapman & Cutler relocate within the city, adding to downtown commercial real estate distress.
New York-based Union Bank has hired brokerage Jones Lang LaSalle to sell a loan of almost $191 million on the buildings at 115 South LaSalle Street and 111 West Monroe Street, Crain’s reported, citing sources familiar with the offering.
About 900,000 square feet of the two structures, which are 27 and 23 stories, have been home to BMO and the law firm, but both those tenants are relocating to the bank’s namesake property completed last year, BMO Tower, next to Union Station, Crain’s reported.
With record-high downtown office vacancies amid the pandemic and the moves pending, the buildings’ owner, South Korea-based Samsung Life Insurance, probably would have struggled to refinance its mortgage.
If a loan sale closes, it would worsen the pain in the Loop’s office market, which has been hit with a series of missed mortgage payments by building owners totaling around $600 million, The Real Deal reported last week.
AMTrust Realty and Brookfield Properties, which own buildings where loan payments have been missed at 135 South LaSalle Street immediately south of the Samsung-owned BMO office and on 175 Jackson Boulevard, recently said they will start negotiations about restructuring their loans.
That means there is competition with other distressed properties for Union Bank as it looks to unload the soon-to-be-former BMO office.
AmTrust’s 1.3 million-square-foot building on LaSalle, which is 87 years old, is already mostly vacant after Bank of America left for its own namesake tower on Wacker Drive.
Landlords of older buildings in particular are feeling the pain as companies are signing leases for Class A buildings in Fulton Market, TRD has reported.
[Crain’s] – Sam Lounsberry
Read more
Commercial
Chicago
JPMorgan’s Julie Thick sees strong demand for Class A offices in Fulton Market, suburban warehouses
Chicago
Loop office landlord defaults on the rise