601W’s Aon Center Returns to Special Servicing

The Aon Center, one of Chicago’s most prominent office towers, is returning to special servicing after the borrower allegedly missed a critical payment.

According to data from Morningstar Credit, the borrower, 601W Companies, allegedly failed to make a required payment for tenant improvements and leasing commissions for the 83-story, 2.8 million-square-foot skyscraper, Bisnow reported. This marks the second time in three years that the loan for the landmark building at 200 East Randolph Street faced such a designation.

Servicer commentary indicates that 601W is currently viewed as unlikely to repay the total loan balance by its upcoming maturity date in July. The building’s financial performance has suffered, as occupancy rates fell to 66 percent as of late last year, down from 88 percent when JPMorgan Chase issued the $536 million loan in 2018, according to the publication.

Net cash flow for the property also saw a 12 percent decline in 2024, leaving it nearly 30 percent below the levels established during the initial underwriting, according to the outlet. In 2023, a reappraisal of the skyscraper set its value at $414 million, representing a staggering drop from the $780 million valuation reported at the time of issuance.

While the valuation has plummeted, leasing agents have previously argued that the property remains healthy and maintains significant cash reserves for deal-making.

Brian Whiting, president of the Telos Group, told the outlet that during a previous appraisal the devaluation was a product of the interest rate environment rather than building fundamentals.

The tower continues to house several high-profile corporate tenants, including Aon, KPMG, JLL, Kraft Heinz and WEC Business Services. Lease rollover risk appears manageable in the short term, with only 10 percent of the tenant base by square footage facing expiring leases through September 2028, according to the Morningstar data.

Despite these stable lease terms, the recurring need for special servicing suggests deeper capital structure challenges for the massive property. The loan was previously modified in the summer of 2023, at which time it received a three-year extension to its current 2026 maturity.

Notably, 601W Companies has remained an active buyer in the Chicago office market, despite the ongoing struggles at the Aon Center. The firm recently formed a joint venture to acquire the 1.4 million-square-foot office building at 175 West Jackson Boulevard for about $41 million in early February.— Eric Weilbacher