Play-by-play: How Reschke landed Google

Chicago developer Mike Reschke’s juggling act with Loop office properties this summer landed a major new occupant for the longtime home of Illinois’ state government offices: Google.

The $105 million deal for the 37-year-old, 1.2 million-square-foot Thompson Center tied the state’s downtown tenancy to the future of the city’s strained financial district. Reschke and his partner, Quintin Primo of Capri Global Investments, cleared the way for Google to absorb the entire building by reversing a plan under which the state would have moved back into the complex after their renovations.

Right before closing on the Thompson Center, Reschke also bought the three-tower former BMO Harris Bank complex on LaSalle and Monroe streets out of distress at a big discount, and the state agreed to move into that property instead, making room for Google three blocks to the north.

The bidding for the note against the Loop towers, which also combine for about 1.2 million square feet, was competitive, according to Reschke and a person familiar with the transaction. Yet it was only Reschke who could offer a plan that would give the LaSalle-facing tower in the complex a big new tenant right away.

The seller of the BMO Harris complex, Samsung Life Insurance, lost $124 million on the deal, and its lender Union Bank lost $70 million, public records show. Samsung had its entire equity erased in the buildings at 115 South LaSalle and 111 West Monroe Streets, which the firm bought for $315 million in 2015.

But both the expansion of the tech giant, which says it’s committed to a “long-term presence” in Chicago, and the state’s move nearby will potentially provide a much-needed boon for the struggling LaSalle Street corridor.

Here’s the timeline of key points leading up to the deals that could transform the Loop and lift the nation’s second-largest central business district by turning a $200 million loss on a historic bank building into the opportunity that secured Google’s commitment to Chicago.

May 1985

The Thompson Center opens, designed by noted architect Helmut Jahn, as home of state government offices at the corner of LaSalle and Randolph streets. Its unusual design immediately draws comparisons to a spaceship.

September 2018

BMO Harris decides to leave its Chicago home of more than a century at LaSalle and Monroe streets for a new tower developed on Canal Street. Less than a year later, law firm Chapman & Cutler follows suit, exiting the heart of the Loop. The moves leave Seoul-based Samsung Life Insurance, which bought the complex for $315 million in 2015, with almost the entire 1.2 million-square-foot office complex to backfill.

May 2021

Illinois Gov. J.B. Pritzker puts Thompson Center on the market. A request for proposals says the property required $325 million in repairs to tackle deferred maintenance and heating and cooling inefficiencies and cost taxpayers $17 million a year to operate. Many observers expect it to be demolished and replaced.

December 2021

Pritzker says Reschke’s development firm, Prime Group, won the bidding for Thompson Center, beating out a plan to tear it down. Reschke plans to buy it for $70 million and put $280 million into renovations, while the state will move its offices out temporarily and then pay $148 million to buy back a third of the updated building, retaining agencies such as the Attorney General’s office.

February 2022

Union Bank hires JLL to sell its $191 million loan financing Samsung Life’s 2015 purchase of the LaSalle and Monroe complex, setting up a loss for the lender.

March 2022

State officials finalize the $70 million agreement with Reschke, with the sale set to be completed in the summertime.

June 2022

Reschke tells The Real Deal he’s in talks with tech firms interested in leasing hundreds of thousands of square feet in Thompson Center after their leaders were shown drawings of his renovation plans. At the same time, Reschke’s firm wins the bidding for the Union Bank loan and he closes on it for about $120 million, assuming control of the former BMO bank complex.

July 2022

The state and Reschke reverse course on Thompson Center after learning of Google’s interest to move into the entire building. They renegotiate to have Reschke pay $105 million for Thompson Center so that he can renovate it through a build-to-suit agreement. Reschke agrees to sell to the state the LaSalle-facing tower of the former BMO complex for $75 million so that public agencies set to move back into Thompson Center have a new downtown home, while the developer retains control of the Monroe portion of the historic bank property. Google issues a $156 million loan to Reschke’s venture to serve as a deposit on its intent to purchase the property once its upgrades are finished.