Accesso Partners has missed payments on a suburban Chicago office building loan, and its lenders are worried it could default on other debts tied to commercial property in the area as distress escalates in the market.
The landlord is delinquent on a $33 million loan on the two-building, 320,000-square-foot Highland Oaks office complex on West 31st Street in Downers Grove, months after a key tenant’s departure, according to credit ratings agency DBRS Morningstar.
Lenders have also added to their watchlists two loans attached to other Chicagoland office properties owned by Hallandale Beach, Florida-based Accesso. Those assets include the Park Plaza, a 211,000-square-foot building in Naperville that has an $18 million loan scheduled to mature in November.
The Highland Oaks loan was placed in special servicing in March, according to Morningstar. The Class B office property was bound to struggle after its former largest tenant, Health Care Service Corporation, the parent of insurer Blue Cross Blue Shield, opted not to renew its 178,000-square-foot lease at the end of last year as it moved to a space that was a quarter smaller in the nearby building at 3500 Lacey Road.
“We continue to work in good faith with the special servicer on Highland Oaks and Park Plaza, and are optimistic about negotiating mutually beneficial resolutions,” a spokesman for Accesso said in an email Tuesday. The special servicer, Midland Loan Services, did not respond to a request for comment.
It’s becoming a familiar storyline as the drum of suburban office distress continues to beat. Also in Chicago’s western suburbs, Philadelphia-based Rubenstein Partners became delinquent on an $85 million loan on the three-building Continental Towers, and a venture led by Chicago real estate investor Chet Balder will hand in the keys to a Rolling Meadows property back to the lender on a $23 million debt. Plus, a Canadian landlord with significant office holdings in Chicagoland, Adventus Realty Trust, could be at risk of losing most of its portfolio.
Accesso was “working aggressively with leasing to identify new tenants” to fill the vacant Highlands Oaks space and looking at amenity improvements and ways to reposition the buildings, which were built in the early 1980s and renovated in 1990, according to a servicer’s report from September.
As the Highland Oaks loan entered troubling financial territory, Accesso also took a hit following a tenant’s exit from two of its other suburban office properties. The firm’s $68 million loan on a building in the Esplanade complex, also in Downers Grove, was watchlisted by the lender after Tyson opted not to renew its lease there after it expired in 2021. The food processing company had previously occupied 12 percent of Accesso’s 609,000-square-foot Esplanade asset.
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A lender in March made the same move to watchlist the loan on Accesso’s Park Plaza property in Naperville, also due to decreased occupancy since the deal was originated, per Morningstar. So far, it’s unclear whether those loans have the potential to worsen the outlook for Accesso or its lenders on its Chicagoland holdings.
Accesso reportedly told a loan servicer that the pandemic significantly reduced demand market-wide over the past two years, and while rental rates have remained resilient, concession packages have fattened, benefitting tenants but costing landlords.