What Distressed Chicago HIgh-Rise is Blackstone Defaulting on?

Anagram Real Estate and Santa Monica, California-based Glendon Capital Management are setting their sights on buying 350 North Orleans Street out of foreclosure.

Blackstone, the previous owner of the building, walked away and defaulted on its $310 million loan on the property. Blackstone paid $378 million for the building in 2015. Brokers from Eastdil are marketing the property and say they’ve received bids between $90 million and $100 million for the 1.3 million-square-foot building, a steep drop in value from the 2015 price, according to CoStar.

Dallas-based Trigild is negotiating the purchase agreement terms with Anagram, according to Crain’s. Chicago-based Anagram is a fresh face with veteran chops: it was founded in 2023 by Max Meyers and Jason Trailov, who were principals at R2 previously.

The building is a smidge under 60 percent occupied, according to the publication, and is owned separately from a hotel that sits above it. The 13-story high-rise was built in 1977 and renovated in 2018, according to marketing materials.

If the deal goes through, add 350 North Orleans Street to the rapidly increasing list of downtown Chicago office buildings that are being purchased off the clearance rack. Post-pandemic recovery across the nation is hampered by a contracting need for office space and raised interest rates, and the effects are being acutely felt by Chicago.

In the area, 500 West Monroe Street just sold to Glenstar and Patrick Halloran for a 76 percent discount from the previous sale price. 255 West Wacker Drive could be sold to Prime Finance on a substantial discount as well. Across the country, the Wall Street Journal reports that some office buildings are selling at 90 percent discounts or more, citing the Denver Energy Center, which was bought for $5.3 million after selling for $176 million in 2013. That’s almost a 97 percent haircut after about a dozen years.

There are signs of light at the end of the tunnel, though. Developers are finding success in repositioning unused office space as hotels or residences, and some are ramping up amenities to sell to high-profile companies as trophy offices.

— Hunter Cooke