The value of a landmark Loop office tower is a quarter of what it used to be due to diminished cash flow to its landlord, a venture of Bridge Investment Group, and well below the balance of its mortgage.
The 47-story One North LaSalle has been reappraised at $37 million, according to an investor reporting package provided to credit ratings agency Morningstar. The valuation marks a major drop from the $142.4 million valuation the property commanded when an $85 million loan secured by the property was issued, per Morningstar.
The loan against the property matures in October and was transferred to a special servicer in August 2022 due to “imminent monetary default,” according to previously published reports.
Appraisers have been hammering office landlords in the Chicago area and throughout the country this year. Distressed values and empty office suites have become commonplace in Chicago’s central business district, where office vacancy hit a record high of 22.6 percent at the end of the second quarter. And downtown investment sales are in a deep freeze: it’s been more than a year since a major office property changed hands in the Loop.
As a result, new evaluations provided for office buildings this year have plummeted at 300 West Adams Street, the mostly vacant AmTrust-owned 135 South LaSalle and a Lincoln Property Group-owned complex in the western suburbs.
The nearly century-old Art Deco One North LaSalle building spans almost 500,000 square feet. A venture of Utah-based Bridge Investment Group owns the property, and the hit to its LaSalle Street property follows a loss the firm took on a suburban Chicago office property earlier this year. Bridge did not respond to a request for comment.
Occupancy at the LaSalle Street property was 56 percent as of December, according to Morningstar. That’s down from 61 percent at the end of March 2022 and 76 percent at the beginning of last year. Bridge was still making payments on the mortgage as of last fall, according to a news report.
Bridge paid about $113 million, or $229 per square foot, to buy the building from a joint venture of Hilco Real Estate and a pair of MB Real Estate executives in 2018.
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