Nearly two years after snapping a drought of office tower sales in Chicago with its first deal in the city, an Oregon investor is coming back for another discounted purchase.
Menashe Properties has an agreement to buy the 31-story tower at 125 S. Wacker Drive, according to people familiar with the situation.
La Caisse, formerly known as Ivanhoé Cambridge, the real estate arm of Quebec’s largest pension fund, is the seller. The sale price could not be determined, but it is expected to be well below the $145 million that it last sold for in 2017.
The deal is preliminary and still could fall apart amid a challenging market for buying and financing office deals.
If the deal is completed, it would mark Portland-based Menashe’s second office acquisition in the Loop business district.
The first, a $45 million deal for the 29-story tower at 230 W. Monroe St., followed a gap of more than a year between any major office sales in Chicago because of high borrowing costs and worries about the U.S. office market.
It was an example of office properties in Chicago and other major cities going for huge discounts to previous pricing.
Montreal-based La Caisse in April hired brokers to seek a sale of the 576,788-square-foot tower. At the time, the building was just 63% leased, with a weighted average lease term of 4.3 years, according to a JLL brochure.
Unlike many trophy towers on Wacker Drive that are anchored by huge tenants, the property at 125 S. Wacker is mostly made up of companies occupying less than a full floor. The average tenant size is just 8,194 square feet, the JLL materials said.
That is similar to Menashe’s business model at 230 W. Monroe.
La Caisse did not respond to requests for comment from CoStar News.
Jordan Menashe, CEO of Menashe Properties, declined to comment on 125 S. Wacker but acknowledged the desire for more investments in the city, saying: “I love Chicago, I love the West Loop, and I’m excited to come back for more.”
“We’ve had significant leasing success at 230 W. Monroe with approximately 50 transactions in less than 24 months and absorption of approximately 150,000 square feet,” Menashe added.
The deal to sell the Chicago tower comes after the pension fund early this year blamed its large exposure to office towers in New York and Chicago for poor overall real estate performance. In June, Bloomberg reported that La Caisse is in default on its mortgage for the 30-floor tower at 85 Broad St. in Manhattan.
In Chicago, La Caisse’s other investments include the nearby 10 and 120 S. Riverside Plaza towers, where $75 million in upgrades has led to recent leasing success.
For the record
The seller is represented by JLL brokers Jaime Fink, Bruce Miller, Patrick Shields, Sam DiFrancesca and John Mason.