UPDATED: March 27, 20203, 4:15 P.M. ET
Online lending firm Enova International made a long-term recommitment to the 22-story office tower at 175 West Jackson Boulevard, despite a foreclosure lawsuit hanging over the building’s ownership.
The Chicago-based company downsized its occupancy by about 25 percent in the building to 135,000 square feet, 43,000 less than before, and extended its lease by seven years through 2034, Crain’s reported. A Cook County judge has appointed JLL to operate the building while owner Brookfield Asset Management faces a lawsuit that claims the firm defaulted on its $280 million loan.
Enova’s long-term lease signing bodes well for Chicago’s vacancy-plagued office market. The Jackson property was about 63 percent leased earlier this year, which is less than the city average of 79 percent. Yet, growing companies like Enova are confident that centrally located office towers, such as the one at 175 West Jackson, will help reverse the remote-working trend.
“Our lease extension at our headquarters in Chicago provides us with additional space as we continue to grow our team to support this growth,” Enova CFO Steve Cunningham told the outlet.
Albeit, it’s likely Enova took advantage of the property’s distressed status and transitioning ownership to ink a deal with favorable terms.
Brookfield acquired the 1.4 million-square-foot property for $306 million in 2018 and assumed the mortgage from Extell Development. The firm had plans for major renovations, but the pandemic halted the project. Brookfield’s lender, U.S. Bank, alleged the landlord quit making debt-service payments around this time.
The $280 million loan had a maturity date of November 2023, and the building was last appraised at $210 million in March 2022. Paying off the loan in time would have been extremely difficult without increased equity. Miami-based LNR Partners was in line to take over the loan and the property through a deed-in-lieu of foreclosure, but the transfer fell through, and the lawsuit ensued.
The Jackson building generated over $9 million in revenue last year, which is half of the debt service payment for the period, the outlet reported. Other distressed downtown properties include the Civic Opera Building and the 43-story office tower at 30 North LaSalle Street.
Correction: A previous version of this article stated that Enova was based in Toronto.
— Quinn Donoghue
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