It’s last call for a Chicago office tower after the tequila mogul behind Jose Cuervo pulled out of a deal to buy 300 South Wacker Drive, forcing the property’s lender to seize the asset.
Lender Deutsche Bank took ownership of the 35-story building in a deed signed over by borrowers Golub & Co. and Alcion Ventures earlier this summer, Cook County records show.
The decision to surrender the property amounts to a painful loss for the joint venture of Golub and Alcion, which bought the 535,000-square-foot property for $155 million in 2017 with a $133 million loan from Deutsche.
Signs of trouble percolated last year when newsletter Real Estate Alert reported that Agave Holdings, the property investment vehicle of Jose Cuervo chairman Juan Beckmann Vidal, was in talks to buy the building. The reported deal would have allowed Agave to pay off the remaining balance of the loan from Deutsche Bank and receive a new one for the same amount from Deutsche, possibly at a lower interest rate. The value of the Deutsche mortgage was reported to be $96M at the time the deal was discussed.
Offering a new loan to a prospective buyer via “stapled financing” method is one way lenders can avoid foreclosing on a property.
The deal later fell through, according to industry insiders, and documents recorded last month show Alcion Ventures founder Mark Potter signing over the property’s deed to an LLC tied to Deutsche Bank.
Representatives of Chicago-based Golub, Boston-based Alcion, Agave Holdings and Deutsche Bank did not respond to requests for comment.
The transfer comes at a time when Golub is shedding office buildings in Chicago — often prompted by upcoming loan maturities it has deemed insurmountable amid higher interest rates and remote work trends — in favor of multifamily investments.
In March, Golub and Alcion relinquished control of the four-building suburban Oakbrook 22 office complex by assigning its $57.2 million loan back to its lender. The giveback followed an unsuccessful attempt to sell the 389,000-square-foot complex in Oak Brook, a suburb roughly 20 miles west of Chicago.
One month later, Golub and partner CIM listed the office tower at 444 North Michigan Avenue for sale after failing to pay off its $123 million debt provided by a Blackstone vehicle that had recently matured. Although the landlords had paid down the debt to $95 million, the joint venture was looking at a substantial loss. The 2018 purchase price of the Magnificent Mile property was $138 million. The companies had put $11 million toward capital improvements at the building but still failed to bring its occupancy above 65 percent by the time it was listed.
As of July, Golub also appeared headed toward foreclosure on the famed Burnham Center, at 111 West Washington Street, after listing the tower and once again coming up short on finding a buyer.
Legal filings show Golub terminated its ground lease for the property and stopped making payments to its underlying landowner, the Shidler Group, in April. The suspended payments triggered a default and led Wells Fargo to file for foreclosure on a $42 million loan issued to Shidler for the land.
The future of the building, which Golub bought for $80 million with a $75 million loan from CIT Group, is unclear, as landowners traditionally have senior interests in properties with ground leases.
Tishman Speyer was hired as the property manager for the 300 South Wacker site, according to a web page for the building and a Chicago real estate source.
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