Blackstone Downplays Chicago Office Tower’s Loan Default

A struggling Magnificent Mile office tower is headed toward default after attempts to sell it fell flat.

The $123 million loan backed by 444 North Michigan Avenue is being transferred to special servicing due to “imminent monetary default” following a December maturity date, commercial mortgage-backed security data compiled by Morningstar Credit shows.

Blackstone Mortgage Trust, a commercial lending arm of real estate investment giant Blackstone, is overseeing the $123 million loan and hired CBRE to market the building last year in a “lender directed sale.”

At the time, the New York-based firm was already aware that the 517,500-square-foot building would likely trade for far less than the loan’s value, which is $238 per square foot.

The 36-story building’s owners, a joint venture of Chicago-based Golub & Company and Los Angeles-based CIM Group, bought the property for $138 million in 2018 and later refinanced it with the $123 million loan. The borrowers scored an extension early last year after paying the balance down to $95 million.

Despite investing $11 million on upgrades to the building first completed in 1976, Golub and CIM have failed to boost the building’s occupancy since the pandemic, and it sits at 61 percent, according to Morningstar.

Blackstone is taking the hit in stride.

“This is a very small loan which we wrote down more than a year ago. As the largest owner of commercial real estate globally, we are well positioned to pursue the path that we believe maximizes value for our investors,” a spokesperson for Blackstone Mortgage Trust said.

Around the same time that the asset was listed the asset last year, another Chicago office hit the market and ultimately ended up back in the hands of its lender.

After exploring a sale of a nearly $57 million non-performing loan note tied to 30 West Monroe Street, a 251,000-square-foot property known as the Inland Steel building, New York Life Insurance seized the Loop asset from the borrower instead. New York-based investment firm Capital Properties had taken out the loan as part of a refinancing in 2016, after buying it for $57 million in 2007.

Meanwhile, Blackstone is working out its sixth loan maturity extension for the Willis Tower’s $1.3 billion debt package.