3L opts for refinancing after seeking buyer for Ebony and Jet building

Developer may hold onto apartment asset longer than expected

3L Refinances Ebony and Jet Building for $29M
3L Real Estate's Joseph W. Slezak with 820 South Michigan Avenue (3L Real Estate, Google Maps, Getty)

The developer that converted the former headquarters of Ebony and Jet magazines into 150 apartments looks to be holding onto the asset a little longer, after exploring a sale earlier this year.

3L Real Estate listed 820 South Michigan Avenue for sale in March. And earlier this month, the firm took out a $29 million loan for the 11-story building with Varde Partners, signaling the sales push might be hitting roadblocks. The loan comes to $193,000 per unit.

A representative from Varde Partners confirmed that the loan was a refinancing taken out by the current owners of the building but declined to comment further. Bill Baumann, part of the JLL team marketing the building, declined to comment. Representatives of 3L Real Estate did not return requests for comment.

The firm completed the conversion of the former offices of Johnson Publishing, the parent of Ebony and Jet, in 2019 with a $37 million project budget, according to the developer’s website.

The potentially stalled sale comes at a time when several other multifamily landlords of big properties are testing Chicago’s market. 

Other apartment complexes on the market include a trio of West Loop multifamily buildings as well as a 261-unit high rise in Old Town owned by the embattled CA Ventures.

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Chicago’s nation-leading rent growth could lead to a seller’s market, but it’s tempered by a tight lending environment to that’s keeping some potential investors at bay. Even assets that are performing well are sitting on the market without any takers. All three West Loop complexes as well as the Old Town tower are over 95 percent occupied.

Loan data shows that occupancy rates alone aren’t always enough to keep certain properties afloat in a higher interest rate era. Developer CedarSt had several multifamily properties land on lenders’ watchlists late last year due to low cash flow. Rising costs of floating-rate loans apparently cut into profits even with a reported occupancy rate of over 95 percent.   

When the Ebony and Jet building was first listed, marketing materials stated it was 99 percent occupied. 

With several multifamily properties testing the market, prior sales have not pointed to strong returns. In March, apartments giant Waterton took a loss on a $35 million sale of a West Loop apartment building to Frank Campise and Jim Jann’s firm JAB Real Estate. 

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