Matt Garrison’s R2 firm is seeking yet another difficult rescue of a downtown Chicago office building.
The Chicago-based development firm has signed a contract to pay about $70 million for the 41-story tower at 150 North Michigan Avenue, according to several people familiar with the matter. The deal, if completed, would represent a significant loss to the seller, CBRE Investment Management, which paid $121 million for the 661,000-square-foot property in 2017, according to public records and previous records. , and then invested another $35 million in renovations. Report.
Like several other downtown Chicago office owners staring at impending loan maturities, CBRE’s investment arm had no choice but to strike a deal at a discount, or else when an $87 million loan from MetLife closed in September At maturity, they will be at risk of foreclosure.
MetLife is set to lose about $10 million on loans while providing seller financing to the buyer, although CBRE originally aimed to price the sale at a level that would pay off the balance of its debt, according to people familiar with the deal. of.
Representatives for R2 and CBRE Investment Management declined to comment.
The 39-year-old diamond-shaped roof property, once known as the Smurfit-Stone Building and now known as the Crain Communications Building, may be in better shape in terms of occupancy than another large downtown that R2 is grappling with. Property is even worse. Revitalization. As of earlier this year when Eastdil Secured began marketing the tower to potential buyers, the tower was 68 per cent leased, well below the city center’s average occupancy rate of 78 per cent last quarter and a record low. That meant it lost ground during CBRE’s tenure, as 79 percent of the property was rented out when the firm bought it in 2017, according to previous reports.
More leases are coming up for the Smurfitstone building. As the due date approached, Eastdil offered the buyer the opportunity to construct a 10-storey contiguous block in the middle of the building, exercising an option to relocate some of the smaller tenants.
For R2, it’s the second iconic struggling downtown Chicago office building that it has engaged in acquisitions to turn a profit in recent months.
The firm is also working with Apollo Global Management to revitalize the Chicago Board of Trade Building, a 44-story, 1.4 million-square-foot office building at 141 West Jackson Street. The project, which was handed over to Apollo earlier this year by a joint venture between Chicago-based Glenstar and Los Angeles-based Oaktree Capital Management, has an occupancy rate of 82%. The landlord sold it through foreclosure in lieu of a deed because it was unwilling or unable to come up with the cash to pay off $256 million in debt on the property it acquired before the pandemic.
Other downtown office buildings that have changed hands this year and cost sellers include 300 South Wacker Drive, a 35-story, 535,000-square-foot building that Miami-based Agave Holdings sold for $97 million. USD price acquisition, the price fell sharply. Sellers Golub and Alcion Ventures paid $155 million in 2017.