The lawsuit, with at least $186 million in principal, interest and other fees, was brought by a group led by New York-based American General Life Insurance. The New York-based AIG subsidiary issued the largest portion of the mortgage when AmTrust purchased the tower in 2014, according to lawsuits and Cook County records.
The complaint highlights a historic wave of economic distress for properties along the vacant boulevard. The rise of remote work and weakening office demand during the pandemic has devastated landlords who were already grappling before the massive bank tenant exodus began.
Companies cutting workspaces are pushing vacancies in downtown offices record all-time high It robs the property of its value, leaving many investors with a building worth less than the debt associated with the building. Rapidly rising interest rates this year have made it more difficult to refinance owner-owned properties, leading many downtown landlords to face foreclosure lawsuits or surrender their properties to lenders without a dispute. .
AmTrust was already facing a tough time in 2019 when the City of Chicago purchased a 260,000 sq. ft. announced that he would retire. About 62% were leased as of last year, well below the downtown office average of 79%, according to real estate information firm CoStar Group. The 43-story tower is currently about 50% leased, according to CoStar.
AmTrust announced its intention to revive the building a year ago. announced plans We’re spending $100 million to renovate some of our downtown office buildings and help them compete for new tenants. A source familiar with 30 N. LaSalle says AmTrust has begun part of that work this year by building move-in ready office spaces, so-called spec suites.
But with high vacancies, high interest rates, and volatile demand for office space, AmTrust is likely submerged, and the towers are now worth less than their outstanding loans. A foreclosure application by American General Life Insurance is a step to seize assets if he cannot come to an agreement with AmTrust to change the terms of the loan.
An AmTrust spokesperson declined to comment on the lawsuit. A Cook County judge yesterday appointed Hilco Real Estate Vice President Mitch Vanemin as a trustee to oversee the property while the foreclosure motion is pending, court records show.
AmTrust funded nearly all of it with a 2014 loan. Acquired for $238 million 30 N. of the LaSalle building. At the time, the tower was 86% leased to him.
AmTrust sought to exit the Chicago office market entirely before the pandemic when it put its entire downtown portfolio for sale in mid-2019. However, the collection was never traded and the building’s value took a hit as demand softened during the public health crisis.
The 48-year-old building at 30 N. LaSalle isn’t AmTrust’s only local distressed asset.At the beginning of the year the company negotiate a deal Turn over the 1.3 million square foot office tower at 135 S. LaSalle St. to the lender instead of facing more likely lawsuits over loan defaults. His $100 million loan for AmTrust real estate. The building remained mostly empty after Bank of America moved into a new eponymous tower on Wacker Drive. The status of these substitution negotiations is unknown.
While Amtrust sorts out the LaSalle Street issue, other landlords in the historic cloister are looking to do the same. The owner of his old 16-story office building at 19 S. LaSalle St. recently $21 million foreclosure lawsuit, Meanwhile, similar lawsuits involved most of the office towers just off LaSalle at 105 W. Adams St. and the office block above the JW Marriott Chicago hotel at 208 S. LaSalle St. has been filed.
The owners of two other LaSalle Street office buildings at 10 S. LaSalle St. and 1 N. LaSalle St. also recently took out loans. transfer to a special servicer; It’s usually a sign that the default is in jeopardy. These loans were packaged with other mortgages and sold to commercial mortgage-backed securities investors, making it more difficult for borrowers to change loan terms.
Mayor Lori Lightfoot hopes part of the run-down office building on LaSalle Street will be converted, at least partially, into apartments.She has her sights set on restoring human traffic to the heart of the Loop, expanded the program If developers commit to making at least 30% of their units affordable, we will provide public subsidies to help finance such conversions.