A high-powered joint venture led by Tishman Speyer Properties LP is threatening to hand back to the lender a West Loop tower as part of a hard-nosed bid to renegotiate the existing mortgage now that a key tenant, Hyatt Corp., is ready to bolt for a new skyscraper later this year.
Sudden leasing luck could still help Tishman avoid the crisis. A Tishman spokesman declined to comment, except to say the New York firm has three strong candidates to take Hyatt’s space.
The venture has offered to refinance Madison Plaza, 200 W. Madison St., if lender New York Life Insurance Co. accepts a substantial discount on the mortgage, sources said. The loan balance was $122 million in February 2001, when the venture bought the building for nearly $169 million.
But New York Life executives are unfazed by the dire warnings. They have so far rejected a reduced payoff and are prepared to take back the 928,000-square-foot structure if the venture walks away, sources said.
A New York Life spokeswoman declined to comment, except to say the loan is current.
The venture includes Tishman, Travelers Insurance Co. and pension fund manager General Motors Asset Management, a likely candidate to participate in a refinancing, sources said. The partners knew of Hyatt’s plans when the venture bought the building, but the weak office market has frustrated the search for new tenants.
200 W. Madison is nearly 18 percent vacant, according to the real estate research firm CoStar Group, but faces a gaping hole in December when an additional 25 percent of the building becomes vacant after Hyatt’s lease expires. At that time, the rental income is not expected to be enough to cover the mortgage payments.
The mortgage is a non-recourse loan, meaning that if there is a foreclosure, the joint venture partners have no financial liability beyond what they have already paid.
Last year, a Tishman/Travelers venture handed back a San Francisco office complex when it was unable to refinance a $160 million loan.
Sale in Glenview: For a top-dollar price of nearly $86 million, Capital Lease Funding Inc., a New York real estate investment trust specializing in single-tenant facilities, has bought a 416,000-square-foot operations center in Glenview that is leased until 2017 to Aon Corp., sources said.
The seller, Prudential Real Estate Investors, a unit of the New Jersey financial-services giant, paid nearly $68 million for the property in 2002, property records show. Representatives of Prudential and its adviser, real estate firm Cushman & Wakefield Inc., declined to comment.
Last year, Aon came close to buying the property, the former Zenith Electronics Corp. headquarters, but the deal fell apart, sources said.
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Return to Studley: Laurence Morgan is returning to help run the Chicago office of tenant representative Julien J. Studley Inc., joining John Goodman, Richard Schuham and Joseph Learner as co-branch managers.
Morgan, 36, was a top suburban broker in Studley’s Chicago office until 2002, when he moved to the firm’s San Francisco office. Most recently, he was a senior vice president in the Palo Alto, Calif., office of rival tenant representative Staubach Co.
Back in his hometown, Morgan will focus on Studley’s suburban practice, which accounts for 30 percent of local billings.
Lohan moving: At 401 N. Michigan Ave., landlord Zeller Realty Corp. has signed a 10-year lease for 9,100 square feet of space with Lohan Anderson LLC, whose principals include architect Dirk Lohan. Real estate firm Colliers Bennett & Kahnweiler Inc. represented the design firm, which is moving from 101 E. Erie St.
Walgreen expanding: As expected, Walgreen Co. has purchased 1411 and 1415 Lake Cook Rd. in Deerfield, part of a plan for eventual expansion of its corporate offices, said real estate firm CB Richard Ellis Inc., which represented the drugstore giant. Cushman & Wakefield represented the seller, a unit of MassMutual Financial Group.