Najem, Khan score $200M Fulton Market construction loan

Fulton Street Cos. completed assemblage last year

Rachel Herzog

Sep 27, 2023, 5:37 PM

In a rare win for new office projects in post-pandemic Chicago, Fulton Street Cos. has secured financing for its development at 919 West Fulton Street.

The $300 million project, which will be Chicago’s first major new office development to get underway in more than a year, is being financed by Little Rock, Arkansas-based Bank OZK and Toronto-based Manulife. The loan amount is more than $200 million, and Manulife provided $120 million, according to sources close to the deal.

The lead equity investment partner is Shanna Khan’s SNK Capital. Khan, the daughter of billionaire Jacksonville Jaguars owner Shahid Khan, has served on the board of Yellowstone Acquisition Company and been involved in development projects in Fort Worth, Texas, and Urbana, Illinois, as well as the upcoming Four Seasons hotel and residences in Jacksonville.

“My family has always considered Chicago our second hometown, and thus it will always have a very special place in my heart as the best city in the U.S. to live, work and appreciate life,” Khan said in a statement.

Bank OZK issued the project’s senior debt, while Manulife took a mezzanine position, people with knowledge of the deal said. The lenders did not comment.

Fulton Street Cos. is led by Alex Najem and Ross Babel. Najem and Khan bought the Lake Street Lofts property at 910 West Lake Street for $49 million at the end of last year, clearing the way for the 400,000-square-foot office project. The L-shaped structure will incorporate the apartment building, facing Fulton and extending south along Sangamon Street.

Private equity firm Harrison Street Real Estate Capital is expected to occupy five floors of the property, or 150,000 square feet, as part of a pre-lease agreement signed for the property. The development will also include a 15,000-square-foot ground-floor retail space, which will house a Gibson’s steakhouse. Harrison Street declined to comment.

Chicago-based JDL Development is teaming up with Fulton Street Cos. on the project.

Though soaring interest rates and a troubled office market have created a tough environment for commercial lending, Najem previously suggested that interest rates will come down by the time the project is completed and leased up enough to refinance the property.

Fulton Market, a former meatpacking district turned trendy office and entertainment area, has been a bright spot in an otherwise rough Chicago office market. The Fulton Market/River West areas have just 6 percent of the central business district’s available sublease space, indicating stronger demand than the rest of downtown, according to a report this month from Transwestern.

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