Civic Opera Building among Chicago office assets with plummeting appraisals

Embattled tower valued $100M less than in 2015, when 601W purchased it

Chicago Office Building Appraisals Down Dramatically

Clockwise: 20 North Wacker Drive, 1520 Kensington Road and 17 East Monroe Street (JLL, Google Maps)

Emma Whalen

Feb 23, 2024, 7:15 AM

As Chicago’s office market continues to reel from the aftereffects of the pandemic, recent appraisals demonstrate just how far property values have fallen.

Some Chicago offices with securitized loans have painfully low appraisals, according to credit ratings service DBRS Morningstar. They included Chicago’s iconic Civic Opera Building, at 20 North Wacker Drive, which has been subject to multiple lawsuits in recent years as owner 601W fights off foreclosure.

The appraisals reported by Morningstar were completed by private appraisal companies, not the Cook County Assessor. However, the local tax authority is expected soon to release the first citywide property tax assessment since the pandemic, putting real estate industry insiders on edge.

A private appraisal of the Civic Opera Building completed this month came in at $119 million, according to Morningstar, down more than $100 million in value from 2015, when 601W purchased the building. At the time, it appraised at $220 million.

Representatives of 601W did not respond to a request for comment. Representatives of Wells Fargo, which sued to foreclose against the Civic Opera Building, declined to comment.

An office portfolio in the Chicago suburbs also took a major hit in a recent appraisal. The value of the full portfolio, which includes offices in Illinois and Georgia, fell from $439 million, when Canadian REIT Adventus Realty Trust purchased it in 2021, to $279.9 million this month.

These are the recently appraised Chicago area properties in the portfolio:

The Crossings of Oak Brook, 1420 and 1520 Kensington Road, Oak Brook

Prior appraisal: $35.4 million

Current appraisal: $14.2 million

Columbia Centre I & II, 9450 Bryn Mawr Avenue, Rosemont

Prior appraisal: $60.2 million

Current appraisal: $26.5 million

Cantera Meadows, 4101 Winfield Road, Warrenville

Prior appraisal: $29.7 million

Current appraisal: $7.5 million

Meanwhile, Adventus has filed for bankruptcy amid a deluge of foreclosures. A representative of Adventus in its bankruptcy proceedings did not respond to a request for comment.

Morningstar also highlighted the decline in appraised value of the Palmer House Hilton’s retail portion, in the 100 block of South State Street. When Thor Equities purchased the property in 2013, its appraised value was $78.5 million. It now stands at $24.7 million.

Palmer House was recently acquired by lender LNR partners at auction for $29.5 million. Representatives of LNR did not respond to requests for comment.

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