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Distressed downtown office properties go up for sale

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Neither list has a specific offer price, but both are expected to win bids below real estate debt as the pandemic obscures the outlook for the office sector. Downtown office vacancy rates remain record high after companies rethink their workspace needs for over two years, with many shrinking their footprint amid the rise of remote work. doing.The reduced demand Hammered the profits of many landlords It pushed down the value of real estate, in some cases caused foreclosure proceedings, and urged owners to hand over buildings to lenders rather than participating in court battles.

The buildings on Adams and LaSalle streets show various examples of stress during the pandemic era. They also set properties to get new life from buyers who can pick them up at a relatively low price and make a large investment in reviving them as an office or something else. Made possible.

The offer of LaSalle Street is $ 50 million foreclosure proceedings Lender Midland National Life Insurance submitted last year to owners of real estate, a venture managed by Chicago real estate veteran Michael Leschke’s Prime Group. Midland claimed that the Reschke venture defaulted to a $ 47.5 million loan by mixing funds between office assets and the hotel Reschke is developing upstairs. Reschke Violently deny the claim, In response to Midland’s illegal storage of income from office properties, Reshke’s venture appears to have defaulted on loans, effectively stacking security deposits in case Reshke’s venture leaves the property. I did.

Last year, a Cook County judge appointed Millennium Property Dan Haiman as the recipient to oversee the approximately 220,000-square-foot property in which the proceedings are pending. Heyman said the parties to the dispute recently agreed to sell the property to resolve the issue.

However, Reschke may intervene before the buyer intervenes. The developers said they have reached and intend to do so with a deal with Midland that will give the Prime Group over 30 days to repay the loan at a mutually agreed price. If he doesn’t, the prime group venture will give Midland the key to the property, Reshke said. He declined to share the agreed price.

“I hope everything goes well and I can perform,” he said.

A Midland spokesman declined to comment.

Property-savvy sources said they were more likely to get bids below the value of the loan. However, transactions that sell real estate require court approval.

Offices on the 13th to 17th floors of the Landmark Building are 49% leased, according to marketing leaflets that make up the condo as an opportunity to lease or redevelop empty space. According to the leaflet, if a buyer makes a large investment in space repairs, the property may be eligible for Class L tax designation from Cook County to reduce property taxes. The offering also includes over 9,500 square feet of retail space on the ground floor, signed by Seven-Eleven and men’s clothing store Charles Tillwitt for a triple net lease.

A Midland spokesman declined to comment.

Reschke’s Prime Group has paid $ 44 million for the entire building designed by Daniel Burnham, spending nearly $ 400 million to renovate the building and convert the first 12th floor to a 610-room JW Marriott, and since then 208 S. I own a LaSalle office. , Opened in 2010. Another Reschke venture has redeveloped the fifth floor of an office condominium into a 232-room luxury hotel called the La Salle Hotel, which is scheduled to open this summer.

There is a possibility of selling the office part as Reschke is betting heavily on the future of office space elsewhere on LaSalle Street.Last year’s Prime Group Venture Agreed reached Purchase and refurbish the James R. Thompson Center. At this center, Reschke will lease a 600,000-square-foot office upon completion of the project.

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