A 30-story Class A office property at 303 E Wacker Drive on Chicago’s East Loop secured in $62.5 million collateralized first mortgage, senior-secured acquisition and lease-up loans.
The loan comes from Northwind Group, a Manhattan-based real estate private equity firm, and was structured so that $32.5 million was advanced for the acquisition, with the remaining $30 million held back as a good-news facility for accretive future leasing costs.
Repeat Northwind borrowers 601W Companies and David Werner Real Estate Investments acquired the property at a significantly low basis, reflecting over a 65 percent discount to the previous purchase price.
John Vavas of Polsinelli Law Firm represented Northwind.
A star of the Chicago office market
The property, which totals over 1 million square feet and includes a 282-space parking garage, is 75 percent occupied, with five years remaining on the lease term.
Since the pandemic, some 300,000 square feet of new leases have been signed there, making it one of Chicago’s best-performing office buildings by leasing volume.
“For various reasons, the Chicago CBD has endured incredible trauma over the past several years,” Jeff Brown, CEO of T2 Capital Management, a real estate private equity firm located just outside Chicago, told Commercial Property Executive.
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“With this purchase within the East Loop office market, it is encouraging to see well-heeled groups step out and be contrarians while also providing a benchmark on pricing. 303 E Wacker is a core located property, and Northwind’s commitment to fund good news money (leasing commissions and tenant improvement allowances for new leases) bodes well for the property’s viability,” Brown said.
The prior owners renovated and upgraded the asset for $32 million, including a new amenity center on the 30th floor overlooking Lake Michigan.
In August, a joint venture between two New York City-based firms—Lloyd Goldman’s BLDG Management Co. Inc. and David Werner Real Estate Investment—acquired 100 Wall St., a 29-story Manhattan building from Barings for $116 million with a loan from Northwind Group.