Bank of America Tower, a skyscraper that opened along the Chicago River just a few months after the onset of COVID-19 in 2020, has lined up $700 million in new debt in one of the largest office refinancing deals in the city since the pandemic.
Owners of the more than 1.5 million-square-foot trophy tower at 110 N. Wacker Drive are borrowing $700 million in the commercial mortgage-backed securities offering, according to a Fitch Ratings presale report.
The massive loan size is the latest example of the newest, highest-rent office towers in Chicago and other large cities rising above broader struggles in the U.S. office market.
The borrowers are Chicago-based Callahan Capital Partners, New York-based Oak Hill Advisors and San Antonio-based Affinius Capital, according to the report.
The 55-story tower is being refinanced nearly four years after those firms bought the tower from Houston-based Howard Hughes Corp. and Chicago-based Riverside Investment & Development in a deal that valued that building at more than $1 billion.
It is the second-largest office refinancing deal in Chicago since the health crisis slammed property values starting in early 2020, trailing only an $830 million deal to refinance the redeveloped Old Post Office in late 2021.
Other large deals include a $610 million CMBS loan for Salesforce Tower, a 60-story property along the river that broke ground in the early weeks of the pandemic, and a maturity extension of a more than $1.3 billion loan on 110-story Willis Tower that was taken out in 2018.
Callahan and T. Rowe Price subsidiary Oak Hill and Affinius declined to comment on the new debt. Affinius did not immediately respond to requests for comment from CoStar News.
Loan terms
The Bank of America refinancing, previously reported by Bloomberg, will replace existing debt on the tower that was designed by Goettsch Partners. Three-pronged columns at the base of the tower support a design that includes a public walkway at the base of the property. That outdoor space runs alongside two restaurants from chef Jose Andres within the tower.
CMBS debt on the Wacker Drive tower will replace $556.1 million in existing debt, repay $129.8 million of preferred equity, pay $11.4 million in closing costs and fund $2.7 million in reserves, according to the Fitch report.
The CMBS loan will be originated by JPMorgan Chase, Bank of America, Wells Fargo, Goldman Sachs and Bank of Montreal, according to Fitch, with the deal expected to close Dec. 15.
The five-year, interest-only loan will come at a fixed interest rate of 6.05%, according to the report.
The tower’s value was appraised at just over $1 billion, according to the presale report. Current ownership has significantly increased the percentage of leased space from about 78% at the time of the 2022 purchase, the report said.
Bank of America Tower is now 97.8% leased to 38 tenants, according to the report, including 532,178 square feet to the namesake tenant, 118,658 square feet to law firm Jones Day and 103,849 square feet to law firm Perkins Coie.
Bank of America, which contributes 33.6% of base rent in the building, has a termination option for most of its space effective in 2032, but with a termination penalty of nearly $37.5 million, according to Fitch.
Howard Hughes’ 90% ownership stake sold for $210 million, the firm said in 2022.
Along with construction financing from banks, including the tower’s namesake tenant, initial financing of the tower included $170 million in preferred equity from USAA Real Estate, a predecessor firm to Affinius, according to previous disclosures by Howard Hughes. Other financing included $10 million in equity from Riverside and $87 million in equity from Howard Hughes, according to the disclosures.