Sterling Bay seeks $300M from Chicago teachers fund to kickstart Lincoln Yards
Development firm requested an additional $25M from current investors
Sterling Bay has turned to the Chicago Teachers Pension Fund to help pick up the pace of Lincoln Yards at a crucial time for the megadevelopment, a deal that, if it comes together, could hurt the project’s initial investors.
The $6 billion mixed-use project has moved sluggishly since being approved in 2019. Now, the developer is seeking funds from the CTPF’s investment committee to kickstart Lincoln Yards, which could lead to losses for the original investors behind the bold 53-acre, 14.5-million-square-foot development, Crain’s reported.
Sterling Bay CEO Andy Gloor recently presented a proposal to the committee, suggesting an investment between $100 and $150 per square foot, amounting to over $300 million. This would replace the current financial backers at discounted rates and revitalize the project that would potentially generate billions of dollars in tax revenue for the city.
The developer wants to consolidate ownership of the Lincoln Yards site, find a new capital partner and resolve a $126 million mortgage tied to a large portion of the property. While Sterling Bay seeks new capital partners, it’s also reaching out to its existing investors for additional funding. The company is aiming to secure $25 million in new equity through an “annex fund” from the current investors.
If CTFP ultimately becomes the primary financial partner, it would be a surprising collaboration, given that the Chicago Teachers Union, whose members have been among the most vocal opponents of Lincoln Yards, has a lot of influence over CTPF.
In Gloor’s pitch, he said, “It’s an unbelievable, generational opportunity to invest in the city” and called it “the most important deal we’ve ever done with Sterling Bay,” the outlet reported.
Sterling Bay faces other financial strains within its portfolio, including a possible forced sale of the Groupon headquarters building and loan issues with the Prudential Plaza complex. But the financial strains posed against Lincoln Yards, which is poised to transform the North Side area for years to come, marks the developer’s biggest challenge to date.
The involvement and support of new Mayor Brandon Johnson — a former Chicago Public School teacher and paid CTU organizer — also remains to be seen, further clouding the project’s future.
— Quinn Donoghue