When Blackstone bought Chicago’s Willis Tower skyscraper for $1.3 billion in 2015, it was the highest price ever paid for a U.S. office building outside New York City. It also raised an equally towering question in commercial real estate circles.
The private-equity giant’s deal for the 110-story property, formerly known as Sears Tower, began a more than decade-long guessing game among property professionals: How will Blackstone eventually cash out?
The puzzle has become trickier to solve because of major investments that New York-based Blackstone has made in the years after its purchase, likely pushing its total commitment beyond $2 billion including debt.
A global pandemic, remote-work trends, higher borrowing costs and plunging office values — a number of them on office buildings in the blocks surrounding Willis Tower — have only made the idea of a multibillion-dollar price tag more difficult to envision in a noncoastal city.
That applies even to a 1,451-foot-tall skyscraper that was the world's tallest for a quarter-century after then-retail giant Sears completed it in the early 1970s. And it's a building with a Skydeck Chicago observatory that's a tourism cash cow bringing in more than $50 million a year.
Talk has swirled in recent months that Blackstone has been mulling options for Willis Tower, including a potential sale. Blackstone has contacted select investors to gauge their interest in assuming more than $1.3 million in commercial mortgage-backed securities debt on the property, industry newsletter Real Estate Alert recently reported.
One of the steepest challenges could be the sheer size of the deal: If the Willis Tower loan were to change hands via a loan assumption, it would be the largest assumption ever for a collateralized mortgage-backed securities loan on a single property, according to research from Grapevine, Texas-based 1st Service Solutions, a firm that works with loan servicers, buyers and sellers.
“There is a reasonability standard that comes into play, but it’s very difficult to pull that in for a deal of this size when you’re talking about a loan of $1.3 billion,” said Stephanie Whittington, leader of the loan assumption team at 1st Service Solutions. “It is very challenging, and the pool of buyers dwindles at that size.”
Rare air
In considering a loan assumption, a special servicer would start by making a comparison of the buyer and seller, she said.
“Picture a scale,” Whittington said. “If you put the buyer on one side and the seller on the other, you’re weighing them. Blackstone is a known and comfortable entity, a very strong player. Anyone who is lending would be happy to do business with Blackstone."
She added that “if a buyer is coming in, they’re going to be compared with Blackstone. When they’re not as strong, it doesn’t mean the deal is impossible to get done. It just means it’s very possible that the servicer would want to add conditions to the loan.”
It's unclear whether Blackstone's reported inquiries about a potential exit remain active. In a statement to CoStar News, a spokesperson for Blackstone neither confirmed nor denied that Blackstone has been exploring options for the skyscraper, including a potential sale.
“We believe Willis Tower’s transformative renovation has positioned it for success, as demonstrated by over 600,000 square feet of leasing in the past two years and more than 1.2 million annual Skydeck visitors,” the spokesperson said.
Blackstone declined to comment beyond the statement.
Open for business
Though Blackstone may be hard-pressed to turn a profit on its long-running investment, the building is by no means in financial distress.
Blackstone has remained current on loan payments while collecting huge annual revenues. Net operating income, a key measure of profitability that calculates total revenue minus operating expenses, was about $129.8 million in 2024, well above the $91.4 million to service the debt, according to CMBS loan data.
Yet because the loan has a floating interest rate that has risen significantly in recent years, Blackstone now has less revenue to pocket after making loan payments.
The debt coverage ratio, a measure of a borrower's ability to make loan payments, fell to 1.42 in 2024, meaning it generated 42% more net operating income than needed to pay its debt. The ratio was underwritten at a much higher 2.57 in 2018, meaning it generated $2.57 in net operating income for every $1.00 needed to pay its debt.
Early last year, as interest-only debt on the property was about to come due, Blackstone struck a deal to extend the maturity of a $1.325 billion CMBS loan on the property at 233 S. Wacker Drive for at least three years. With extension options, Blackstone has until as far off as 2030 to pay off the loan.
Beyond its record purchase price, Blackstone has invested extensively to make the property stand out as a trophy more than a half-century after it opened.
Most significantly, Blackstone spent more than $500 million expanding the already wide base of the tower to create 300,000 square feet of space for restaurants and other retail and amenities on lower floors.
Blackstone’s Perform Properties unit also has made upgrades to amenities elsewhere in the building along with costly overhauls of elevators and other building systems.
Factoring in other expenses such as regular maintenance, leasing costs and property taxes, Blackstone is likely to have invested far beyond $2 billion in the Chicago icon, industry professionals estimate.
Though the property generates significant revenue, Blackstone would need to sell the tower for far more than it paid in 2015 to pay off the loan and reap a profit.
Even so, Blackstone appears to remain open for business, still actively seeking out new tenants to boost occupancy and long-term cash flow.
That comes with upfront costs such as broker commissions and allowances for tenants to build out their spaces.
The tower’s approximately 4 million square feet of office space is about 89% leased, according to CoStar data. Tenants include United Airlines’ global headquarters.
In late 2024, for-profit education company Adtalem Global Education leased about 84,000 square feet in a headquarters move from a nearby tower. In late 2025, insurance company Zurich North America announced plans to move its Chicago office to about 52,000 square feet in Willis Tower.
Blackstone also has continued adding tenants to the new retail space, last spring announcing new tenants Van Leeuwen Ice Cream, Cava and Mendocino Farms.
CoStar News recently reported that one existing office tenant, Dutch trading firm IMC, agreed to expand its space by about 100,000 square feet. That will increase its footprint in the building to more than 250,000 square feet.
Values in flux
Office valuations have been difficult to pinpoint in recent years because of low liquidity, with most deals in Chicago and other large cities spurred by loan maturities or financial distress.
That differs starkly from when Blackstone bought the property in 2015, when property values and the downtown Chicago office leasing market were booming.
Willis Tower’s 2026 value also is difficult to ascertain because of its unusually large size and because of a wide range of revenue streams — such as the observatory, broadcast antennas and the sprawling retail space — not found in typical office buildings.
The challenge of valuing Willis Tower came into focus last year when Blackstone negotiated a three-year loan extension, a deal with loan special servicer KeyBank that came with another two one-year extension options.
A few months after the extension, Morningstar Credit reported that the property’s appraised value had fallen to $1.03 billion, well below the loan balance and significantly below the $1.78 billion appraised value from when the tower was refinanced in 2018.
A few weeks later, Morningstar DBRS noted that the reduced valuation did not take into consideration the value of the Skydeck as a going concern, which when included boosted the value of the property to more than $1.4 billion — and an expected $1.63 billion by 2027.
Even so, industry professionals say it is highly unlikely that a buyer will emerge to pay the full value of the loan or more in today's investment sales market. Acquiring the property could be done directly by assuming responsibility for paying off the loan.
But that would represent an overwhelmingly large deal size for a single property in one of several U.S. urban office markets that have been slow to bounce back from trends such as remote work.
“I don’t see the sheer size of the deal precluding a loan assumption,” said Stav Gaon, head of securitized products research and strategy at investment firm Academy Securities. “The challenge could be exacerbated by the Chicago office market.”
Observatory windfall
An appraisal report shows that the observatory’s value as a business was $420.1 million, with just $47.9 million of that coming from “real property value.” The business includes the observatory on the 103rd floor, event space on the 99th floor and a museum on the tower’s lower retail level.
The Skydeck attraction includes the Ledge attraction, thick glass boxes allowing guests views 1,353 feet straight down. That feature was added in 2019.
The observatory brought in just over $52.5 million in revenue in 2024, making up more than 20% of the property’s total revenue, according to the appraisal report. Observatory revenue accounted for an even higher percentage of net operating income, providing more than 29% on that basis, according to CoStar data and the appraisal report. Net operating income is a measure of profitability after deducting costs from gross revenue.
The property’s broadcast antennas have generated between $9.86 million and $11.5 million in annual revenue in recent years, according to the appraisal report.
Few peers
Blackstone is the largest private-equity owner of commercial real estate globally, leaving the firm on the short list of potential buyers of major single-property or portfolio offerings.
That leaves a tiny list of potential buyers when Blackstone looks to sell a huge, one-of-a-kind property such as Willis Tower.
The building’s history and unique qualities could attract a major U.S. or international investor, industry professionals say.
But the overall pool of buyers has been shallow amid the U.S. office sector’s struggles and other real estate and economic challenges.
The recent sale of the 35-story office tower at 401 N. Michigan Ave. was the highest priced Chicago office sale in nearly four years, but its $131.5 million price is about one-tenth the value of Willis Tower’s last sale price and its current loan balance.
One recent sign of hope was the $700 million refinancing of the 55-story Bank of America Tower at 110 N. Wacker Drive, with that trophy tower appraised at just over $1 billion.
Not far from Willis Tower, the redeveloped Old Post Office landed an $830 million CMBS refinancing deal in late 2021.
Handing over the keys
Blackstone could hand the property back to the lender, in this case the CMBS bondholders, a scenario that has played out frequently across the country in recent years.
Blackstone already has walked away from another big office investment in Chicago, a building at 350 N. Orleans St. in River North that it bought for $378 million in 2015. Blackstone refinanced it with a $310 million CMBS loan in 2018, surrendering the property after the loan matured five years later.
In Manhattan, Blackstone also gave up a building at 1740 Broadway that it bought for $605 million in 2014. Blackstone later defaulted on $308 million CMBS loan.
“There’s a tug of war regarding the perception of Blackstone,” Gaon said. “Investors generally like Blackstone as a sponsor because Blackstone is a very sophisticated buyer. If you’re bringing in a less savvy investor, that could carry a negative connotation. On the other side, Blackstone has shown it isn’t shy about walking away from a property that isn’t performing well.”
Yet surrendering a property with the stature of Willis Tower, at a potential massive financial loss, could create a bigger reputational hit, industry professionals say.
Blackstone’s president and chief operating officer, Jon Gray, grew up in north suburban Highland Park, Illinois, and has spoken with pride about Blackstone’s modernization of the famous tower.
“Willis Tower has always been iconic within Chicago’s skyline and around the world,” Gray, then Blackstone’s global head of real estate, said in a 2017 statement when the company unveiled plans for the $500 million overhaul.
“The investment we announced today is the largest Blackstone has ever made in reimagining one of its properties,” Gray added in the statement. “Our goal is to restore Willis Tower to its original prominence and make it a must-visit destination in Chicago for tenants, local residents and tourists. This investment sets a bold new standard for office environments and urban centers around the world and underscores our commitment to the development of the city of Chicago.”
Getting creative
Blackstone may need to find an unusual path to exit its investment, industrial professionals say.
That could include putting the property into a publicly traded real estate investment trust, such as the one that owns the Empire State Building in Manhattan.
Blackstone also could decide that Willis Tower’s parts are worth more than the whole. It could line up separate buyers for distinctly different parts of the building such as the newly developed retail, offices, observatory and broadcast antennas.
That approach previously played out at one of Chicago’s other best-known skyscrapers, the 100-story former John Hancock Center on North Michigan Avenue, more than a decade ago. Residential condos in the tower remain individually owned.
Blackstone also could seek to further modify the loan, either buying more time or reducing the balance of the loan.
James Nelson, head of U.S investment sales at Avison Young, said in a statement to CoStar News that an increase in downtown Chicago office sales last year signaled a long-awaited improvement in liquidity that helps “demonstrate that buyers are active, but they are laser-focused on price and future repositioning potential.”
As for Willis Tower, he added: “There are creative structures — partial interest sales, joint ventures, or even carving out specific revenue‑generating components of the asset — that could broaden the buyer universe and help bridge the pricing gap. The good news is that Chicago continues to attract institutional capital when the story and the basis make sense.”