LaSalle Street office building value plummets, leaving owner just above water

New York-based AmTrust still has equity after appraisal at fraction of 2015 value

135 S. LaSalle Street, Chicago (Loopnet, iStock, Illustration by Kevin Cifuentes for The Real Deal)
135 S. LaSalle Street, Chicago (Loopnet, iStock, Illustration by Kevin Cifuentes for The Real Deal)

The value of Chicago’s Field Building at 135 South LaSalle Street dropped by $200 million since 2015, leaving the property owner just above water.

A recent appraisal put the 1.3 million-square-foot building’s value at $130 million, a fraction of the $330 million it was appraised for in 2015, before longtime tenant Bank of America moved out of 830,000 square feet last year for its own namesake, 57-story building at 110 North Wacker Drive, Crain’s reported, citing Bloomberg.

The new appraisal puts the building at less than 40 percent of its 2015 value, though it doesn’t put New York-based owner AmTrust Realty underwater on its $100 million mortgage.

AmTrust refinanced the property in 2015 with the loan, keeping a smaller amount of debt on the building despite its value soaring from the 2008 purchase price of $188 million, a deal financed by AmTrust taking out a $100 million loan at the time to buy the property from Bank of America in a sale-leaseback, Crain’s reported.

While AmTrust decided against taking out an even bigger loan while refinancing in 2015, it turned profits from the building as its owner, with the property’s net cash flow nearly $18 million annually, well over the $3.3 million yearly debt service the company paid, Crain’s reported, citing Bloomberg loan data.
At 88 years old, the LaSalle Street building, like others in the Loop, may need extensive renovations to compete again in Chicago’s office market, which has seen vacancy near record highs with the rise of remote work amid the pandemic and a preference for newer Class A buildings in Fulton Market among companies needing space. AmTrust is planning to put $100 million into renovating its six other Chicago office properties, but not 135 South LaSalle, it announced last fall, according to Crain’s.

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It is unclear if the company plans to hold onto the Field building or if it will surrender its deed to a lender. A person familiar with the company’s plans told Crain’s that would be considered.

An adjacent building also is in potential trouble after losing a major bank tenant. A loan for almost $191 million is for sale on the 115 South LaSalle Street property, which is being vacated by BMO Harris Bank and a law firm that have occupied 900,000 square feet there for years, and are moving to BMO’s new namesake tower next to Union Station. The loan is expected to sell for less than that.

Mortgage payments have also been missed at other buildings in the Loop, including at 175 Jackson Boulevard and 181 West Madison Street, The Real Deal reported this month.

[Crain’s] – Sam Lounsberry

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