Blackstone $343M Loan on 1 South Wacker Defaults

A Blackstone-issued loan is under water for a Downtown Chicago office tower.

601W Companies defaulted on a $343 million loan for 1 South Wacker Drive June 9, according to Bloomberg. The New York-based company purchased the 40-story, Helmut Jahn-designed tower in 2019 for $310 million. The 1.2 million-square-foot property is 73 percent occupied, and was renovated just before the pandemic struck in 2020.

The news comes on the heels of renewable energy and natural gas developer Invenergy entering talks to double its office space in the building. Multiple outlets previously reported that 601W was facing “financial questions” on many of their downtown properties, as the Chicago downtown market still struggles to rebound from the pandemic.

Blackstone Mortgage Trust originated the debt in 2018, and a Blackstone spokesperson told Bloomberg that the loan was less than two percent of their whole portfolio, and that while they think the building is performing well, they’ve been keeping a closer eye on it since 2022. About half of the debt was portioned into a commercial mortgage-backed security, according to the publication.

Across Chicago’s downtown area, office buildings are being repurposed into mixed-use apartments or retail space. They’re also trading hands at staggering discounts. 601W was one of the beneficiaries of the fire sale, as it purchased 175 West Jackson Boulevard for $41 million. The purchase price for 175 West Jackson was an 87 percent discount from its pre-2020 pricing, according to the outlet.

601W also owns the Aon Center and the Old Post Office. Earlier in June, they acquired the 55-story Wells Fargo Center North Tower in Los Angeles for an undisclosed amount. The Wells Fargo Center North Tower at 333 South Grand Avenue spans 55 stories and 1.4-million-square feet.

The company is also gearing up to fight a foreclosure attempt on the Downtown Chicago Civic Opera Building loan, and its Aon Center is staring down the barrel of maturity of a $678 million debt package. 601W has also reached the loan maturity deadline on the U.S. Steel Tower in Pittsburgh.

— Hunter Cooke