The vice grip on commercial real estate lending could be loosening up, as developers of one of Chicago’s tallest skyscrapers are nearing acquisition of a massive loan on the property.
Local firms JDL Development and Wanxiang America Real Estate are expected to receive $415 million refinancing from Wells Fargo for the two-tower One Chicago, a mixed-use development on West Superior Street, CoStar reported. The refinancing, arriving amid high-interest rates and plummeting commercial property values, entails a three-year, interest-only loan with an expected interest rate of about 6 percent. It provides developers additional time to fully lease the property and increase income.
The deal, set to be finalized later this month, marks one of the largest real estate loans in the city since the onset of the pandemic. Once completed, the loan will be packaged and sold to debt investors.
One Chicago comprises a 77-story tower that’s among the tallest in the city and a 49-story building. The refinancing will be applied toward 735 apartments, 248,800 square feet of office and retail space and 757 parking spaces. The 77 individually owned condominiums, however, will not be covered by the debt.
JDL acquired the site for One Chicago from the Archdiocese of Chicago and subsequently secured a $475 million construction loan from Bank OZK in March 2019. The new loan will settle a remaining balance of $366.5 million and $293.3 million of preferred equity, with borrowers contributing $262.6 million in equity. The property, appraised at $829.7 million, will leave $414.7 million in implied remaining equity, the outlet reported.
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The deal stands out during a period of challenging lending conditions, which have yielded discounted prices for even highly leased luxury apartment towers, despite Chicago’s rent growth surpassing most U.S. markets. The last major refinancing deal in Chicago was the $830 million loan for the Old Post Office redevelopment in late 2021.
One Chicago retail tenants include Life Time Fitness and Whole Foods, with leases extending into the 2030s and 2040s, respectively. Developers are also converting fifth-floor space into short-term rental units. The property boasts amenities such as indoor and outdoor pools, a golf simulator, a basketball court and a rooftop lounge. As of April, roughly 90 percent of the apartment units were leased, with an average rent of $4,655 per month.
—Quinn Donoghue