Northwind Group provided a $62.5 million first mortgage, senior secured acquisition and lease-up loan collateralized by 303 East Wacker Drive, a 30-story Class-A office property totaling over 1 million square feet including a 282-space parking garage.
The loan was structured such that $32.5 million was advanced for the acquisition with the remaining $30 million held back as good news facility for accretive future leasing costs. The property is located on the Chicago River in the East Loop submarket and is currently ~75% occupied with ~5 years of remaining lease term and has signed ~300,000 square feet of new leases since the pandemic, making it one of Chicago’s best performing office buildings by leasing volume.
The property was acquired by a JV between 601W Companies and David Werner Real Estate Investments, both are repeat borrowers of Northwind. The financing facilitated the acquisition from the existing lender via a deed-in-lieu of foreclosure from prior ownership Beacon Capital Partners. Given the borrower’s strong reputation in the marketplace, they were able to acquire the property at a significantly low basis reflecting over a 65% discount to the previous purchase price.
The building has recently been renovated and modernized with over $32 million of building upgrades and tenant-focused improvements by the prior ownership, including a brand-new amenity center encompassing the entire 30th floor overlooking Lake Michigan. The recent capital investment coupled with the intrinsic advantages including 360-degree views and efficient rectilinear floor plates positions the property well to continue its strong leasing performance.
Given the borrower’s need for certainty of execution prior to year end, Northwind was able to move quickly and provide a financing solution to capitalize the acquisition. The loan reinforces Northwind’s strategy of partnering with repeat institutional grade borrowers, financing centrally located, high-quality properties and caps off a year that saw the firm execute over $1.1 billion in debt transactions.
These loans have included a $120 million condo inventory collateralized by the unsold units at the Mandarin Oriental Residences on Fifth Avenue, a $63 million construction loan for the development of a residential condominium property in Gramercy, a $77 million condo inventory loan to a completed residential condominium property in Austin, Texas, and most recently a $50 million bridge loan for a 20-story office property in Manhattan’s Financial District. The transaction also represents Northwind’s sixth loan to 601W Companies and David Werner.
Northwind was represented by John Vavas of Polsinelli Law Firm.
