A Canadian landlord with substantial offices in the suburbs of Chicago and Atlanta could be at risk of losing most of its 14-property portfolio.
Adventus Real Estate TrustThe company, which has 4.3 million square feet of offices in those two markets, missed March and April interest-only payments this spring on a $350 million loan tied to those properties, according to Kroll Bond Rating Agency.
Collateral for the debt includes five offices in the Atlanta area and three offices in suburban Chicago, including the 304,000-square-foot Crossings complex at 1420 Kensington Road in Oakbrook and the 203,000-square-foot Crossings complex at 28100 Torch Parkway in Warrenville. Square feet of Cantera Meadows property. The company paid $36 million for the Crossings property in 2013 and Cantera Meadows for $28 million in 2014. The landlord has two one-year deferment options on the debt, which is due in July, though it must avoid defaults and defaults to exercise them.
Missed payment is in Lender Driven Auction Adventus’ Oak Brook Office Center, a four-building, 327,000-square-foot asset tied to a separate debt, is scheduled for completion by the end of the month. The landlord agreed to return the property to its lender rather than delay the foreclosure proceedings.
In addition, recent payment defaults at offices in the Canterra, Crossings and Atlanta areas added to the turmoil surrounding Adventus, which has made major corporate changes and squeezed office workers with maturing debt as interest rates began to rise last year.
The privately held REIT suspended cash distributions to its shareholders in October due to exposure to variable-rate debt — in which Adventus holds about $386 million — the company said in November. , accounting for about 64% of its total outstanding debt. That same month, Adventus had to pay more than $2 million in principal to get JPMorgan to extend the maturity date of a $36 million loan for the 251,000-square-foot Highland Landmark V office building in the Chicago suburb of Downers Grove.
In April, the landlord’s former chief operating officer, Rick Charlton, was promoted to chief executive and acting president, succeeding Rodney Johnston. In addition, there have been a series of changes to the company’s board of directors in recent months. Charlton declined to comment.
Landlords like Adventus, who have lost tenants during the pandemic, have struggled to refinance or sell assets until lenders close, and have struggled to find new tenants to fill vacant spaces due to lackluster demand.
last year, Adventus Allures Fitness Equipment Company Life Fitness The 55,000-square-foot office is leased at its Columbia Center III property in the suburb of Rosemont, about half of what the company occupied in the building before the pandemic.
Another $29 million loan to Adventus for the 247,000-square-foot Columbia Center building remains on the lender’s watch list because the property isn’t generating enough revenue to service debt, according to a report Wells Fargo provided to credit ratings agency DBRS. . Morning Star. Another lender with a larger loan to the REIT — $128 million in debt related to the 869,000-square-foot Riverway office tower in Rosemont — is also on the watch list.
By the time the loan is extended in 2021, the eight properties, totaling 2.2 million square feet, tied to the now-delinquent $350 million in debt are 85% leased, Kroll said. Their occupancy was about the same as last year, but rising rates ate into the portfolio’s net cash flow, which was $24.4 million last year. That was enough to cover the portfolio’s debt service payments for the year, but still 10.6% less than when the loan was made.
Currently, it is unclear how Adventus will resolve its debt.