A pair of distressed Loop office towers will test the market, as Chicago’s office sector remains in a slump.
The 49-story tower at 161 North Clark Street and the 29-story building at 230 West Monroe Street are up for grabs, both of which are buried in a sea of debt and carry a value that’s far less than what was invested in them, Crain’s reported.
A group of banks led by Paris-based Societe Generale, which is the lender for the 1.1 million-square-foot Clark Street tower, plans to hire a broker to sell the $230 million loan on the property. The owner is a Korea Post venture. Experts believe the building is worth far less than the $230 million loan, marking a potential massive loss for the venture, which paid about $331 million for the tower in 2013. The loan is set to mature in 2025.
The Monroe Street tower recently went up for sale and is being marketed by real estate services firm Eastdil Secured. The owner, a venture of Florida-based Accesso Partners, bought the 623,000-square-foot property for $122 million in 2014 and refinanced it with an $87.7 million loan from Morgan Stanley in 2019, the outlet said. People familiar with the listing estimate that the building’s worth is closer to the loan amount from Morgan Stanley than Accesso’s purchase price.
Office buildings selling for far less than what an investor previously paid for the site has become common in today’s market. The remote-work movement, brought on by the pandemic, is still in effect. Chicago’s vacancy rate reached a record high recently, as a slew of companies have undergone massive layoffs, leading to huge office downsizings and sublease listings.
An Accesso spokesperson, however, is confident that the firm will land a favorable deal for the Monroe Street building.
“Over the course of our ownership of 230 West Monroe Street, we have created significant value through hands-on property management and upgrading the property’s interior,” the spokesperson told the outlet. “Offloading the asset allows us to recoup our investment while using the proceeds to reinvest in our portfolio.”
—Quinn Donoghue