Another suburban Chicago office building is hitting hard times and tripping up its lender.
A low-profile New York-based landlord is late with its monthly payment for June on a $40 million loan against the Highland Landmark I building at 3075 Highland Parkway in Downers Grove.
The loan isn’t supposed to mature until August 2025, but it’s listed as delinquent and lost its largest tenant, Advocate Health Care, according to loan servicer commentary collated by credit ratings agency Morningstar.
Advocate moved its corporate headquarters to the property in 2013, bringing 600 employees and signing onto a 140,000 square foot lease. Occupying three-and-a-half floors, Advocate was the largest tenant in the seven story, 300,000-square-foot building.
Beginning in January, loan servicer commentary noted that Advocate Health Care planned to terminate its lease, which expired April 30. Representatives of Advocate were unavailable to comment on the lease.
The $40 million loan was originated by JPMorgan Chase in 2015 and signed by New York-based borrower Teresa Tsai of a firm known as Interventure Advisors. Interventure Advisors could not be reached for comment.
The firm has held an interest in the building since 2005; the property has previously been reported to be owned by New York-based Falcon Real Estate Investment Co. on behalf of overseas investors since the firm purchased it 19 years ago, and Interventure has ties to Falcon.
But this is the roughest stretch suburban Chicago office landlords have endured since at least the Downer Grove property’s last sale. Vacancy across the suburban office market remains above 30 percent, a rate near the record high set in the last year as demand stays muted in the post-pandemic commercial real estate slump.
The 3075 Highland loan is now between 30 and 59 days delinquent and Morningstar commentary indicates that as of June, tenants making up 72 percent of the office space have leases that expire in 2024.
Next door, Chicago’s suburban office distress is even more apparent. An affiliate of JPMorgan recently hired Cushman & Wakefield to find a buyer for an office building known as Highland Parkway V at 3005 Highland Parkway. The bank took over the building from Vancouver-based Adventus Realty Trust, which encountered immense financial trouble with real estate.
At one point, Adevntus had a portfolio of seven office complexes in suburban Chicago and five in suburban Atlanta. It has a series of entities tied to those properties making their way through Canadian bankruptcy courts. The overall picture is bleak, with a cumulative claim of nearly $382 million in liabilities and less than $3 million in assets, bankruptcy records show.
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