Chicago, Illinois – Our Commercial Loans news today is on a major transaction from the Windy City, Chicago. Tishman Speyer Properties has agreed to purchase an Investment Property which is a new office tower in downtown Chicago. This Investment Property purchase is for less than the entire cost to build it. The Commercial Real estate developer will pay owner Mesirow Financial $380 million for its headquarters at 353 North Clark Street. The significance of this Investment Property purchase is it is the first time in more than a decade that a Commercial Property of this magnitude has been sold for below its cost of construction in Chicago.
Since 1978, Tishman Speyer has acquired, built or developed over 325 commercial real estate projects totaling over 116 million square feet. They have acquired an Investment Property Portfolio in excess of $50.2 billion in total value across the United States, Europe, Latin America and Asia.
This agreement came as an affiliate of Mesirow was running up against a deadline to pay off its construction loans on the commercial property, according to reports on the transaction. Reports say the price is a little less than the debt on the nearly 1.2-million-square-foot tower, which recently opened about a year ago.
Tishman Speyer’s acquisition of the building, which was being sold by Mesirow Financial, is the New York-based company’s first Investment Property acquisition in the U.S. since the start of the downturn. The sale price is probably the second-largest deal in Chicago this year, following the sale of nearby 300 North LaSalle. We are not certain of the Commercial Loan financing on the 300 North LaSalle closing.
This sale sidesteps an ugly foreclosure suit that might have been filed by Munich, Germany-based Hypo Real Estate Holding, which financed the commercial real estate project with a construction loan that was coming due.
The sale should clean the slate of tens of millions of dollars in equity invested in the 45-story Office tower. This Investment Property was built by a venture led by veteran Chicago developer Richard Stein, a Mesirow senior managing director.
As we stated above Chicago’s office market hasn’t seen a new skyscraper sold for less than the construction cost since the collapse of the commercial real estate market in the 1990. At that point in time billionaire investor Sam Zell scooped up 161 N. Clark St. and 1 N. Franklin St. at low bargain prices.
In the beginning leasing at 353 N. Clark was going fine. Mesirow and the law firm Jenner & Block had agreed to take more than 60% of the building before construction started in 2007. But information had the leasing effort subsequently stalled at about 80% occupancy.
The price Tishman has agreed to pay for the building, about $324 a square foot, stands in sharp contrast to the record-breaking $503 a foot that a Southern California investment firm paid this summer for the nearby skyscraper at 300 N. LaSalle St. That Commercial Property was completed last year however it is approximately 95% leased.
The Hypo loan has an outstanding balance of roughly $330 million and has been extended until Tishman closes on the purchase, sometime before the end of the year. The project was also financed with a $44-million mezzanine loan from Chicago-based real estate firm Transwestern Investment Company. It is possible that Transwestern might get back as much as 90% of its mezzanine loan. Particularly in today’s tight senior debt market, mezzanine financing is an increasingly important capital option for growing companies for many reasons. A Mezzanine Loan is a great source to close that deal you may be working on.
If you have found an Apartment For Sale, or Office Building to buy, then we are ready to get you mortgages rates. As Commercial Mortgage Lenders we can see if you qualify for a FHA or Non Recourse Loan. As Money Lenders we can also arrange Commercial Loans and get your refinance rates. Our Private Lenders may also be able to fund your commercial mortgage refinance.
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