Appraisal Drops 62% on Beacon Capital’s Chicago Office Tower

An updated appraisal dashed Beacon Capital Partners’ hopes for a lucrative return on Chicago’s AMA Plaza.

The value of the downtown skyscraper, at 330 North Wabash Avenue, plummeted 62 percent to $208.5 million, a steep decline from its $550 million appraisal at loan issuance in 2021, Bisnow reported.

The Boston-based landlord has faced significant financial distress related to its ownership. The company, headed by president and CEO Fred Seigel, was hit with a foreclosure lawsuit in November related to its debt on the riverfront property.

The lawsuit, filed by a CMBS lender, claims Beacon owes $372 million to bondholders to prevent a foreclosure sale of the 52-story office tower.

It further alleges that Beacon defaulted after missing a $3.8 million property tax payment in August, along with monthly debt service payments. The property moved to special servicing that same month after Beacon indicated potential issues with payments.

The loan was set to mature in June 2023, but was extended to June 2025 after Beacon paid $5.9 million for an interest rate cap extension.

Beacon acquired the 1.2 million-square-foot building for $467 million in 2016 and refinanced it with a floating-rate loan in 2021. Occupancy has since decreased, with the building standing at 84 percent leased in June, down from 96 percent at the time of purchase.

The American Medical Association, the largest tenant, extended its lease through 2035 but slightly reduced its space.

Beacon also faces a looming deadline to repay a $156 million loan on its 303 East Wacker Drive property and recently sought a buyer for the building.

Beacon continues to hold firm despite the office market’s struggles following the pandemic-driven downturn and subsequent increase in office vacancies. The firm recently demonstrated its confidence by purchasing 333 West Wacker for $125 million, a significant drop from its 2015 value.

Beacon’s portfolio also includes 231 South LaSalle Street, 190 South LaSalle Street, 515 North State Street and 1 North Dearborn Street.

— Andrew Terrell