Blackstone has at least three more years to pay off about $1.3 billion in debt on Chicago’s tallest skyscraper, the 110-story Willis Tower.
New York-based Blackstone struck a deal to extend the looming maturity of a $1.325 billion commercial mortgage-backed securities loan on the former Sears Tower, according to someone familiar with the situation.
The deal with the CMBS special servicer, KeyBank, includes two additional one-year extension options on debt that had been set to mature next month after a series of previous extensions, according to the person.
The agreement gives Blackstone until as far as early 2030 to continue improving the value of the office tower at 233 S. Wacker Drive. The New York private-equity giant already has invested more than $500 million on the addition of retail and entertainment at the base of the tower and other improvements.
Blackstone’s deal comes amid a prolonged drought for office leasing and property sales throughout the country, but amid signs of an industry turnaround. Blackstone President Jonathan Gray last month talked about being “firmly on this recovery path for real estate,” and the firm reportedly is in talks to buy a 50-story New York office tower at 1345 Avenue of the Americas.
In a statement to CoStar News, a Blackstone spokesperson confirmed the maturity extension in Chicago without commenting on terms of the deal.
“This extension reflects our continued belief in the strength of Willis Tower,” the statement said. “We believe the building’s transformative renovation has positioned it for success, as demonstrated by over 400,000 square feet of leasing in the past 18 months and more than 1 million annual Skydeck visitors.”
Through its EQ Office division, Blackstone has owned the 1,451-foot-tall skyscraper since 2015, when it paid $1.3 billion.
The interest-only Willis Tower debt briefly moved to special servicing while the extension of the loan, which had been set to mature March 9, was negotiated with KeyBank, according to Morningstar Credit and a report to bondholders that was obtained by CoStar News.
Blackstone’s loan extension previously was reported by Commercial Observer.
The current loan was taken out in 2018 from lenders including Barclays and Deutsche Bank, and it was packaged into CMBS offerings backed by bond investors. The debt, which replaced an approximately $1 billion loan on the property, initially was set to mature before Blackstone first extended the loan by a year in 2022.
Other short-term extensions have followed amid a challenging market for financing office properties.
Blackstone wrapped up its major project at the base of the tower in early 2022. The expansion added dining, shopping and entertainment options for office workers and the million-plus tourists who visit the observatory annually.
Recent office leases include for-profit education company Adtalem Global Education signing a 13-year deal for 84,000 square feet, moving its headquarters from a nearby building.
The approximately 4 million-square-foot tower is now nearly 87% leased, according to CoStar data.
The largest tenant in the tower is United Airlines, which has its global headquarters there.
Sears’ name came off the building in 2009, well before Blackstone’s ownership, as part of a lease with Willis Group Holdings. That company and Towers Watson merged in 2016 to create a company name, Willis Towers Watson, that resembles the skyscraper’s name.
Willis Towers Watson in late 2023 subleased some of its space in the Chicago building to Atlanta-based employee services firm OneDigital.