A Saudi Arabia-based investor that owns real estate throughout the world has a preliminary deal to buy a 35-story office tower at the southern tip of Chicago’s Magnificent Mile shopping district.

The Olayan Group is negotiating to buy the building at 401 N. Michigan Ave., which has been owned by Chicago billionaire Neil Bluhm’s Walton Street Capital since 2017, according to people familiar with the situation.

The deal has not been completed and still could fall apart at a tenuous time for office acquisitions, financing and leasing.

Riyadh-based Olayan still must finalize an agreement with lender ING, which is expected to take a loss on the sale and provide new debt, according to the people familiar with the negotiations. An exact price could not be determined, but it is believed to be between $120 million and $130 million, the people said.

That would be well below the value of a $160 million loan that ING provided when Walton Street refinanced the property in 2019, according to Cook County property records.

If completed, the deal would continue a run of office sales in Chicago and elsewhere at prices less than previous valuations, often at big losses to both the owner and lender.

In another pending office deal at a discount just southeast of the Mag Mile, New York-based 601W has a contract to buy the 30-story tower at 303 E. Wacker Drive for about $63 million. It last sold for $182 million in 2018.

Falling prices have created opportunities for some well-capitalized buyers such as Olayan to enter new areas or add to holdings in key markets.

Olayan, Walton Street and ING did not immediately respond to requests for comment from CoStar News on Tuesday.

The tower at 401 N. Michigan is alongside an Apple flagship store and historic Tribune Tower, across the street from the Wrigley Building. The large plaza in front, Pioneer Court, has hosted art exhibits and other attractions in recent years.

If the deal is completed, the visible location would add to an Olayan portfolio that includes high-profile properties such as the Manhattan office tower at 550 Madison Ave.

The 41-story building, designed by Philip Johnson and John Burgee, opened in 1984 as the headquarters for AT&T and later served as the U.S. home for Sony. The tower features a so-called Chippendale top and a renovated lobby with a 50,000-pound stone art installation.

Olayan’s properties also include the 120-room Mandarin Oriental hotel in Barcelona on the well-known street Passeig de Gracia.

Olayan Group was founded by Suliman Saleh Olayan, who worked for a forerunner company of oil giant Saudi Aramco before dying in 2002, according to the firm’s website.

Walton Street has owned the Chicago tower at 401 N. Michigan since 2017, when it paid $360 million for the office building and adjacent retail including the Apple store, which it sold to Invesco for $90 million in 2019.

After selling the retail, Walton Street refinanced the offices with the $160 million loan from ING, according to Cook County property records.

Walton Street is poised to sell the offices for less than that amid historically low demand for corporate space and sluggish property sales volume throughout the country. Those conditions have pushed down values even for relatively well-performing properties such as 401 N. Michigan.

It was 89% leased with a weighted-average lease term of 7.6 years when JLL brokers began marketing it for sale earlier this year, according to marketing materials from the brokerage. There has been $17.2 million of capital invested in the tower since 2017, according to a JLL brochure.

Bluhm, a real estate and casino tycoon, recently refinanced a nearby property owned by another of his firms, the 900 North Michigan Shops vertical mall and office space within a 66-story tower at the northern end of the Mag Mile. That $180 million loan to Bluhm's JMB Realty, which replaced maturing debt, required the real estate firm to put in $56.4 million in new equity and cover other expenses, CoStar News reported in August.

The seller is represented by JLL brokers Jaime Fink, Bruce Miller, Sam DiFrancesca and Patrick Shields.