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Monday, 16 April 2018

Brookfield Completes $305Mln Purchase of Chicago's 175 West Jackson

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Commercial Real Estate Direct Staff Report

Brookfield Asset Management has paid $305 million, or nearly $210/sf, for 175 West Jackson Blvd., a 1.5 million-square-foot office building in downtown Chicago.

The Toronto investment manager, which completed the deal last Friday, funded its purchase by assuming existing financing against the 22-story property. The loan had an original balance of $280 million and amortized to $275 million. Pieces of it are scattered among three CMBS transactions: COMM, 2013-CCRE12, holds a $147.4 million piece; COMM, 2013-CCRE13, an $88.3 million piece, and COMM, 2014-CCRE14, a $39.2 million piece. The loan started amortizing in October 2016.

The thinking is that the loan has been modified, but details of that transaction couldn't be immediately learned. The loan had transferred to special servicer LNR Partners last month as it was expected to default. At the same time, word got out that the collateral property's previous owner, a venture of Extell Development and the Strategic Investment Property Fund, which is controlled by Switzerland's Spitzer family, was in talks to sell the property.

The CMBS loan had transferred to LNR because it was expected to default as occupancy at the collateral property, which was constructed in 1912 and underwent a massive upgrade in 2001, had declined substantially. As of the end of last year, it was 83 percent occupied, according to servicer data compiled by Trepp LLC, down from 92 percent in 2013 when the loan was written. Cash flow had declined to $17.4 million, which was just less than that needed to fully service the amortizing loan, from $23.3 million in 2013.

In recent days, the property's appraised value was reduced to $347 million from $410 million. The thinking was the reduced appraisal would pave the way for a loan modification, where it would get split into two pieces. A $275 million loan would represent a lofty 90 percent of Brookfield's $305 million purchase price. A more realistic amount for the loan probably would be in the $185 million ballpark.

The 175 West Jackson building has massive floorplates - 68,000 sf - making them among the largest in the city. It's also in an area with a healthy 8.1 percent vacancy rate, as of the end of last year, according to Reis Inc., which pegs asking rents at $22.65/sf, down slightly from 2016.

The property includes catering facilities, a rooftop deck, conference center, a 250-space underground parking garage, fitness center and 45,607 sf of ground-floor retail that's leased to tenants such as CVS, Fifth Third Bank and Liberty Travel. Office tenants include Enova International, a financial technology company that four years ago leased 154,866 sf under a 12-year agreement.

Comments? E-mail Orest Mandzy, or call him at (267) 327-4281.

 



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“The Weekly” is Commercial Real Estate Direct’s PDF newsletter, sent to subscribers every Friday morning. With over 100 news stories published on Commercial Real Estate Direct each week, “The Weekly” features the top stories in commercial real estate that industry participants need to know first. “The Weekly” also contains:

  • Breaking mortgage, CMBS, and REIT news

  • Quarterly league tables with rankings of B-piece buyers, book runners, and lenders

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Additional Info

  • Syndicate to Realpoint: No
  • Cities: Chicago
  • States: Illinois
  • Sector: Office
  • Subject: Property Acquisitions (ACQ)
  • Company: Brookfield Properties
  • Valuation: More than $150 million
  • Private: No
Read 1243 times Last modified on Thursday, 31 May 2018

Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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