Manulife smacked with $151M Wacker Drive foreclosure suit

Toronto-based landlord listed West Loop building for sale nearly a year ago, prepared to take a major loss to sell

Manulife Faces $151M Wacker Drive Foreclosure
200 S Wacker with Manulife's Roy Gori (LinkedIn, Manulife Investment Management, Getty)

A year after big Chicago office landlord Manulife listed 200 South Wacker Drive for sale, the property’s lender is instead moving toward a massive foreclosure suit on the downtown tower.

The lender, Bank of China’s Chicago branch, issued a $163 million loan when Toronto-based Manulife refinanced the 40-story property in 2019. When the tower, which spans 762,000 square feet, was first listed late last year, the potential sale price was thought to be as little as $170 million, which would have covered the loan but marked a huge loss in property value for Manulife, which purchased it for $215 million in 2013.

Manulife has also spent an additional $8.5 million on renovations to the 762,000-square-foot, 40-story building.

Manulife declined to comment. Jaime Fink, who was marketing the property for JLL, did not respond to a request for comment, and Bank of China and its attorney also did not respond to a request for comment.

The lawsuit filing, submitted Thursday in Cook County court, shows that Manulife paid down a portion of the loan last September in exchange for a yearlong extension on the maturity date of the loan. Bank of China reduced the principal loan amount to $151 million as part of the extension.

Bank of China said in its complaint the loan is in default and it is attempting to obtain an order that would allow for the sale of the building to satisfy the debt, or at least part of it. The bank is also asking the court to appoint a receiver for the building that would take over its operations while the court case plays out.

The building’s riverfront location in a southwest corner of the Loop was thought to be a potential draw for buyers, and JLL was marketing the property as 82 percent leased with a net operating income of nearly $12 million. Its occupancy has declined from 96 percent when Manulife bought it.

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With the redevelopment of the Old Post Office building, major renovations to the Willis Tower and a new 50-story office tower next to Union Station, this portion of the West Loop has become a more sought after destination for major office tenants.

But 200 South Wacker’s problems aren’t uncommon. Several office buildings within the Loop whose loans have come due have faced similar challenges and foreclosures in recent months, as remote work and higher interest rates have battered Chicago’s office buildings by making it nearly impossible to refinance existing balloon debts upon maturity.

Earlier this month, France-based lender Societe Generale filed a $237 million foreclosure suit against the landlord of 161 North Clark Street, a 49-story building with more than 1 million square feet that’s owned by a venture of the South Korean postal service.

And last year, Manulife put another Loop tower up for sale — the 40-story, 815,000-square-foot asset at 55 West Monroe Street — in a listing also expected to result in a substantial loss in property value.

While the property didn’t have a listing price, market experts at the time said they thought bids for that building would come in at less than $130 million, well under the $244 million Manulife subsidiary John Hancock Life Insurance paid for the building in 2014. The property appears to still be on the market.

Manulife isn’t walking away from the Windy City, however. The company was part of the debt package on the more than $200 million construction loan to Fulton Street Cos. and Shanna Khan for 919 West Fulton, an 11-story, 470,000-square-foot office building planned in Fulton Market.

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