The Continental Towers in Rolling Meadows is up for sale as its lender seeks a buyer to revitalize the distressed office complex, offering an assumable low-interest rate loan.
Rialto Capital, the special servicer managing the property on behalf of bondholders, has tapped real estate services firm Transwestern to find a buyer for the 910,000-square-foot complex at 1701 Golf Road, Crain’s reported.
The firm listed the property in an effort to recover as much of the outstanding mortgage balance as possible. Rialto sued the landlords for foreclosure last year, alleging they defaulted on an $85 million loan tied to the complex.
The property is jointly owned by Rubenstein Partners, a private equity firm led by founder and senior managing principal David Rubenstein, and Chicago-based real estate company Glenstar, led by co-founder Michael Klein.
Rialto is offering potential buyers to assume the existing mortgage, which carries a 4.75 percent interest rate and matures in September 2028. That could be attractive, given today’s higher interest rates, said Transwestern’s Mike Salmen.
While Rialto is open to working with prospective buyers to adjust loan terms, the high vacancy rate and challenging office market conditions complicate things.
The 42-year-old complex, which includes three office buildings and a 67,000-square-foot hub connecting them, is only 59 percent occupied, as large tenants like Komatsu and Panasonic have vacated significant square footage over the past few years. Verizon remains the largest tenant, with a lease for almost 160,000 square feet expiring in April 2028.
This is not the first time Continental Towers has experienced financial difficulties. Glenstar previously partnered with Walton Street Capital to acquire the property out of foreclosure in 2013 for $58.5 million. After investing $65 million in renovations and leasing efforts, the joint venture sold the complex to Rubenstein at a loss in 2018 for $122 million, or $134 per square foot.
Now, Glenstar is once again involved in helping navigate the property through another phase of financial instability. A sale could settle the foreclosure lawsuit, allowing Rialto to avoid taking ownership of the property through a court-ordered sale.
— Andrew Terrell
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