Apollo Global Management has snagged control of the Chicago Board of Trade Building in the Loop, a Chicago landmark, with a plan to overhaul the 92-year-old office building known for its trading floor space.
A joint venture of Chicago-based Glenstar and Los Angeles-based Oaktree Capital Management handed the 44-story office building at 141 West Jackson Boulevard over to New York-based Apollo as part of a deed-in-lieu of foreclosure, Crain’s reported. The move allows Glenstar and Oaktree to potentially avoid defaulting on $256 million in debt on the property, which was issued in 2020 and included a $198 million senior loan from Athene, which merged with Apollo last year, according to Cook County records and published reports.
The tower is likely the most well-known office building to be surrendered by an owner since the pandemic drove the city’s office vacancy rate to record highs. Many office buildings have generated more debt than the properties are worth, plus interest rate increases aimed at tamping inflation have increased borrowing costs and pushed lenders away from risky bets on aging offices, all of which makes it difficult for owners to sell or refinance the properties. New York-based AmTrust RE late last year was dealt a foreclosure lawsuit by its lender on another LaSalle Street office building in the Loop at 30 North LaSalle, a property holding debt worth more than $185 million that the company allegedly owes.
Apollo isn’t betting the building will bounce back as it is in a post-pandemic office market, having already hired Chicago developer R2 to renovate the property and explore potential non-office uses.
“Ownership is committed to [making] a substantial investment in the building to attract and retain tenants,” R2 Principal Max Meyers told the outlet in a statement. “We will embrace the architecture and history and complement it with modern amenities with a value proposition.”
The 1.4 million-square-foot office tower is 82 percent leased, which is a little above the average for office buildings downtown. The largest tenant is CME Group, which signed a 15-year lease for 148,000 square feet in 2012.
Glenstar bought the property in 2012 for about $152 million and invested an additional $35 million in new technology and upgrades. Then, in 2014, Glenstar brought in Oaktree and took out an additional $160.8 million mortgage on the historic tower. Oaktree and Glenstar also refinanced the tower with a $178 million loan in May 2017.
The venture tried to sell the tower in 2019 for $330 million. No one took the bait and Glenstar and Oaktree refinanced the tower, yet again, with the $256 million in debt in February 2020. While the Apollo-controlled venture recorded a $198 million mortgage against the property, the source of the additional debt is unclear from public records.
The Chicago Board of Trade building was built from 1925 to 1930 and was the tallest tower in Chicago until 1965, when the Richard J. Daley Center was built. The tower was designated a Chicago landmark in 1977 and listed on the National Register of Historic Places in 1978.
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