A local developer and a hedge fund in New York are looking to bail out on a 831,000-square-foot office property near O’Hare International Airport.
They could be in for a crash landing.
Chicago-based Glenstar and TPG Angelo Gordon have not hung a price on Presidents Plaza office complex, at 8600-8700 West Bryn Mawr Avenue, but it is believed to be available at a steep discount with a refinance due on a $147.5 million loan in two years, Crain’s reported.
Glenstar and its partner paid $147 million for the four-building property in 2018, and refinanced for slightly more three years later with a loan from Bank of America. The square-footage wasn’t reported, but the property spans 14.1 acres. The refinance came after the owners put $34 million into renovations aimed at retaining and attracting tenants to the property along the Kennedy Expressway.
Increased borrowing costs due to rising interest rates and reduced demand for office space amid post-pandemic work-from-home patterns are the main reasons the complex isn’t likely to fetch near the value of its mortgage. The property is 63 percent leased, down from 92 percent when Glenstar and TPG Angelo Gordon got the building six years ago.
The sellers have hired Cushman & Wakefield to market it, and Bank of America executives have assumed a hand in the sales process, the outlet reported.
The rugged atmosphere for a sale opens up the possibility of the bank taking over the building, and Glenstar is no stranger to handing keys back to lenders — it was in joint venture that previously that saw the Chicago Board of Trade building downtown go back to a lender, and more recently handed over the Schaumburg Corporate Center to Affinius Capital, according to Cook County property records.
Adding to the difficulty of marketing Presidents Plaza is the prevalence of discount deals for offices in the Chicago market, from the Loop to the suburbs just beyond O’Hare. Vacancy rates range from 25.8 percent downtown to the mid-30s in the suburbs, according to various reports.
Cushman & Wakefield is pitching Presidents Plaza as a chance to add value by attracting tenants to a property with relatively fresh amenities and accents. The effect is “comparable to a five-star hotel or new construction apartment complex,” the brokerages’ marketing material claims.
The co-op hardware retail chain True Value has its headquarters at the property, along with a passel of smaller tenants with an average lease size of about 10,000 square feet.
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