The firm that developed a 66-story, mixed-use skyscraper on Chicago’s Michigan Avenue in the 1980s is refinancing the office and retail portions with $180 million in new debt after a larger loan recently matured.
JMB Realty is refinancing 831,350 square feet of commercial space in the tower at 900 N. Michigan Ave. with a loan from Goldman Sachs, with $80 million of that debt set to be added to a pool of loans in a new commercial mortgage-backed securities offering to investors, according to a KBRA presale report.
The 37-loan CMBS deal for properties throughout the country is being put together by Barclays. The remaining debt on 900 N. Michigan will later be added to other CMBS loan offerings.
The $180 million loan does not cover separately owned luxury condominiums and a Four Seasons hotel within the tower, which JMB has owned since completing the project in 1988.
The property is located on Chicago’s iconic Magnificent Mile retail corridor, which is facing historically high vacancy after several large stores have closed and some luxury retailers have moved to nearby Oak Street.
The North Michigan Avenue office market also is suffering from low demand, causing at least one developer to eye a big residential conversion.
JMB is a Chicago-based real estate firm formed by three childhood friends, Judd Malkin, Robert Judelson and real estate and gaming magnate Neil Bluhm in the 1960s.
They overcame a challenging lending market in part by contributing $56.4 million in equity to the property to replace the previous loan’s $206.8 million remaining balance and to fund reserves and other costs for future leasing, according to the KBRA report.
The previous loan, borrowed from Massachusetts Mutual Life Insurance Co., had an original balance of $250 million in 2014, according to Cook County property records. That loan was set to mature last month, according to online property records.
JMB did not immediately respond to a request for comment from CoStar News on Tuesday.
New Loan
The 10-year loan has an interest rate of 6.85%, according to the KBRA report, which says the property is nearly 89% leased.
JMB recently signed a new deal with the largest office tenant in the property, GCM Grosvenor. The asset manager signed an 11-year extension for 72,738 square feet, while shedding 40,458 square feet of space that it previously leased.
Other office tenants include JMB and another of Bluhm’s firms, Walton Street Capital.
The largest tenant in the 900 North Michigan Shops vertical mall is a 265,148-square-foot Bloomingdale’s department store, according to the presale report. Other retail tenants include Gucci, Aritzia, Tesla, Equinox and J.Crew.
JMB has invested more than $57 million in upgrades to the property, including adding the Aster Hall food hall, a library, a speakeasy and a digital art display canopy, according to the presale report.
Leases accounting for almost 73% of the property’s total base rent expire between 2026 and 2029, which required the borrower to set aside $5 million in upfront costs toward re-leasing vacant spaces, according to KBRA.
CoStar News reporter Mark Heschmeyer contributed.