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Case Study

Financing for the acquisition of 55 West Monroe

Jones Lang LaSalle was engaged by The Hearn Company (“Hearn”) to secure financing for the acquisition of 55 West Monroe, a 76 percent leased, 800,569-square-foot Class A office tower located in Chicago, Illinois. Hearn successfully acquired the property in December 2011 at a purchase price of $136 million.
 
CHALLENGE
Although 55 West Monroe is one of the premier office assets in Chicago’s central loop, at the time of acquisition, the property was only 76 percent leased. Additionally, given S&P’s recent downgrade of the U.S. government, the capital markets became constrained, proving execution difficult.
 
Additionally, the sponsor was seeking a loan to value greater than 70 percent—a challenge given the turbulent capital markets.

SOLUTION
In order to overcome the low occupancy rate, JLL made a point to highlight the property’s competitive edge given its core-plus nature, which would ultimately offer significant in-place cash flow to the new owners with additional value provided upon further lease up. In order to deliver on Hearn and Kellet’s desired loan proceeds, JLL creatively structured a low cost first mortgage plus a mezzanine loan in order to create the lowest cost of capital.
 
RESULTS
After an extensive search encompassing life companies, domestic banks, foreign banks and conduit lenders, JLL ultimately arranged financing of $86.5 million in senior debt through Wells Fargo Bank and $21.5 million in a mezzanine facility through Redwood Trust for the new buyers. The creative financing structure devised by JLL saved over 150 bps per year in interest when compared with a traditional financing structure.
 
CONTACT INFORMATION
Keith Largay
keith.largay@am.jll.com
+1 312 228 3111     
 

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