R2 pays $60M for downtown office tower

R2 Companies has closed on an office acquisition in downtown Chicago, more than six months after going under contract to buy it.

A venture led by R2 paid nearly $60 million for the 41-story, 655,000-square-foot building at 150 North Michigan Avenue, down from the $70 million it was in line to pay last June, Crain’s reported. The sale price is just under $92 per square foot.

Eastdil Secured brokers Bryan Rosenberg and David Caprile helped arrange the sale. 

The price marks a 50 percent discount from the last time the building traded, in 2017, when a venture of New York-based CBRE Investment Management paid $121 million for it, or nearly $185 per square foot. The property’s dramatic decline in value reflects the beleaguered state of Chicago’s office sector, which has been plagued by the remote-work era and high interest rates.

The 150 North Michigan building is one of many downtown properties that have sold at steep discounts. The office building at 230 West Monroe Street, for instance, recently traded for 63 percent less than its 2014 sale price. 

MetLife Investment Management offered the loan through “staple financing,” where the seller arranges the financing.

Despite the persisting challenges, R2 is optimistic about the potential of the property. It plans to leverage previous investments in the building to attract tenants and enhance its market value. 

The tower, known for its distinctive diamond-shaped rooftop, was 68 percent leased at the time of sale, the outlet reported. CBRE Investment Management’s upgrades resulted in a few leasing wins to offset the departure of its largest tenant, Crain Communications.

R2, primarily known for its properties on Goose Island, has been expanding its presence in downtown Chicago, taking on projects such as the renovation of the Chicago Board of Trade Building and collaborating on the conversion of office spaces into apartments. 

—Quinn Donoghue 

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