A Wacker Drive office landlord has withstood the pain of losing some of its largest tenants and is ready for a fresh start after settling its debt.
The State Teachers Retirement System of Ohio has paid off a $150 million loan balance tied to the building at 77 West Wacker Drive, Crain’s reported. The loan, provided by Northwestern Mutual Life Insurance, was set to mature Sept. 1.
Despite losing a handful of tenants in light of the remote-work movement, STRS Ohio is confident that it can improve the 51-story tower’s poor occupancy rate of 62 percent. Many office landlords in Chicago have sold their holdings for less than what they paid or surrendered them via deed-in-lieu of foreclosure as the city’s office sector continues to struggle.
STRS Ohio’s strategic plan behind the mortgage payoff remains unclear, as another lender hasn’t yet been revealed to have provide new debt for the property, which is usually how landlords fund costs such as leasing commissions and tenant improvement costs. However, the move reflects the $88.8 billion fund’s ability to remain flexible, enabling potential advantages in negotiations with prospective tenants.
“They no longer have that loan hanging over their head while competing owners might give their buildings back (to their lenders),” mortgage broker Dave Hendrickson told the outlet.
Designed by renowned architect Ricardo Bofill, the tower has stood as an iconic feature on Chicago’s skyline since its completion in 1992. Its unique design and prominent location along the Chicago River continue to attract attention, despite recent challenges.
STRS Ohio’s portfolio encompasses a wide range of properties, including retail and residential towers, notably the 481-unit Streeter apartment high-rise at 345 East Ohio Street. As of June 2022, the pension fund’s real estate holdings were valued at $11.6 billion, the outlet reported, citing the fund’s annual report.
— Quinn Donoghue
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