Blackstone Inc. is in discussions with lenders on a $310 million mortgage backed by a struggling Chicago office tower.
(Bloomberg) — Blackstone Inc. is in discussions with lenders on a $310 million mortgage backed by a struggling Chicago office tower.
The commercial mortgage-backed security on the property, 350 North Orleans, was transferred to special servicing ahead of its July maturity, according to Kroll Bond Rating Agency. Payments on the non-recourse loan are current, KBRA said in report Monday.
Blackstone “effectively” wrote down its investment in the tower, in the River North neighborhood, to zero last year, said Jillian Kary, a spokesperson for the firm.
“The property is experiencing the well-known headwinds facing US traditional office buildings lacking first-class, modern amenities,” Kary said. “This location in the River North submarket has been particularly challenging.”
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KBRA has downgraded ratings on the loan, citing weaker performance from falling occupancy at the 1.3 million-square-foot (121,000-square-meter) tower.
The property was built in the 1970s and has undergone various renovations, including one that was completed in 2018. Blackstone bought the building, previously known as River Point North, in 2015.
Office-loan defaults have been ticking up, with landlords struggling to make payments as borrowing costs soar and tenant demand sinks. Brookfield Corp. and a Pacific Investment Management Co. office landlord are among major institutional owners that have defaulted on large office mortgages this year.
US traditional office represents less than 2% of Blackstone’s global portfolio, Kary said.
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