After not finding a buyer for a four-building complex in Chicago’s western suburbs, the longtime owners instead have handed the keys back to their lender, adding to a national uptick in voluntary surrenders of office properties.
Golub & Co. and Alcion Ventures last month assigned their nearly $57.2 million loan on the Oak Brook 22 complex back to the lender, an affiliate of real estate investment and lending firm Heitman, according to DuPage County property records.
Previously, Chicago-based Golub and Boston-based Alcion hired brokers to sell the complex near the Oakbrook Center shopping mall in Oak Brook, Illinois. A Cushman & Wakefield brochure mentioned the availability of “full-term, interest only seller financing” to help overcome falling office values, rising interest rates and a dearth of available debt.
The Oak Brook handover demonstrates that even favorable loans are no guarantee of a sale as remote and hybrid work trends persist four years after the onset of the pandemic.
In one recent deal, local developer R2 paid $60 million, or about half the previous sale price, for the 41-story tower at 150 N. Michigan Ave. in Chicago’s Loop business district. That deal included financing from the existing lender, MetLife Investment Management.
But increasingly often, properties are being voluntarily surrendered back to lenders, rather than those distressed deals going through a formal foreclosure process.
Also in Chicago’s western suburbs, the owner of four office buildings in the Arboretum Lakes business park in Lisle, Illinois, handed the properties back to their lender via deeds in lieu of foreclosure.
It’s not clear what Heitman plans to do with the Oak Brook 22 complex. Golub declined to comment. Heitman and Alcion did not immediately respond to requests for comment from CoStar News on Tuesday.
Oak Brook 22 includes 11-story towers at 1211 and 1301 W. 22nd St., connected to a one-story structure at 1225 W. 22nd St. There also is a four-story building at 1315 W. 22nd St.
Alcion and Golub had owned the complex since paying $57.5 million in 2014. Those firms refinanced the campus with a $58.1 million loan in August 2019, less than a year before the start of the pandemic.
When it went on the market for sale, the 389,111-square-foot property was 75.3% leased, according to Cushman & Wakefield materials. There were 67 tenants averaging 4,375 square feet per lease.
Golub and Alcion had invested almost $26 million in capital improvements since buying the property, including new fitness and conference centers, outdoor seating and covered parking, according to the marketing materials.
The complex, built in the 1960s and formerly known as Oak Brook Executive Center, also includes retail such as a Michael Jordan’s Restaurant.