One of Chicago’s tallest skyscrapers is set to be refinanced with $415 million in commercial mortgage-backed securities debt, one of the largest real estate loans in the city since the arrival of COVID-19 more than four years ago.
Developers of the two-tower One Chicago residential project across from Holy Name Cathedral are expected to complete the refinancing from Wells Fargo Bank on or around June 25, with the loan then packaged and sold to investors of the debt, according to a presale report on the offering from S&P Global Ratings.
Rising 971 feet, the 77-story tower at 14 W. Superior St. is No. 7 among the city’s tallest skyscrapers. The other tower at 23 W. Chicago Ave. is 49 stories.
The new loan is set to replace a construction loan from 2019, with the debt covering 735 apartments, 248,832 square feet of office and retail space and 757 parking stalls. The refinancing will not affect 77 individually owned residential condominiums.
The River North development was completed in 2022 by Chicago-based firms JDL Development and Wanxiang America Real Estate.
They are refinancing the project, which also includes retail and office space, amid higher interest rates and relatively low sale prices throughout the country. The three-year, interest-only loan at an expected interest rate of about 6% will buy the developers more time to finish leasing the property and boosting income.
JDL and Wanxiang did not immediately respond Friday to requests for comment from CoStar News.
The size of the One Chicago loan stands out amid those challenging lending conditions, which have caused even highly leased luxury apartment towers to sell for less than previous pricing despite Chicago’s rent growth outperforming most U.S. markets.
The largest refinancing deal in Chicago since the start of the pandemic was New York-based developer 601W’s $830 million loan on the Old Post Office redevelopment into offices in late 2021.
One Chicago began with JDL Development, led by founder and CEO Jim Letchinger, buying a large parking lot across from Holy Name from the Archdiocese of Chicago and later landing a $475 million construction loan from Bank OZK in March 2019, according to Cook County property records.
The new, securitized debt will pay off a remaining loan balance of $366.5 million and $293.3 million of preferred equity, with the borrowers contributing $262.6 million of new equity, according to the S&P report. The property was appraised at $829.7 million, creating $414.7 million in implied remaining equity, the report said.
Retailers in the shared podium include Life Time Fitness, which leases 97,347 square feet in a lease expiring in early 2032, and Whole Foods, which leases 60,956 square feet until 2042, according to S&P. The developers are converting 11,271 square feet of fifth-floor space into nine short-term rental units, the report said.
Amenities include indoor and outdoor swimming pools, a golf simulator and putting green, a basketball court and a rooftop lounge with fire pits. The apartment units were 89.9% leased overall as of April, according to the S&P report, with an average rent of $4,655.
Wanxiang America Real Estate, the real estate investment arm of a Chinese auto parts maker, has invested in several prominent Chicago properties, including the two-building Prudential Plaza office complex along Millennium Park that it is upgrading, the trophy office tower at 150 N. Riverside Plaza, and the multifamily and hotel tower at 300 N. Michigan Ave.
JDL’s projects include the completed No. 9 Walton luxury condo building and the ongoing, 12-tower North Union residential development on the Near North Side. JDL also is part of the development team for the Fulton Market office project under construction at 919 W. Fulton led by Chicago developer Fulton St.
CoStar News reporter Mark Heschmeyer contributed.