Prime Qualifies for $188M Tower Reposition

The property was formerly known as IBM Plaza, but the company relocated to Hyatt Center in 2004. Another major tenant, Jenner & Block, plans to leave its 383,000-sf tower for a new building it will share with Mesirow at 353 N. Clark. The building is now 83% occupied, though PGRT has sold off floors two through 13 to a joint venture entity controlled by LaSalle Hotel Properties to develop a five-star hotel. A few tenants have signed into or renewed at the building, but have been able to get lower lease rates or incentives due to the Trump International Hotel and Tower going up behind the Wabash building.

The loans are secured by a first mortgage on the office property, a leasehold mortgage on the adjacent 902-space parking garage leased by an affiliate of Prime Group pursuant to a long-term ground lease, and all rents related to the office and garage. The ING loan is for 30 years, and the GE loan, which is further secured by a cash deposit or letter of credit in the amount of $2.75 million, is for five years.

Barbara Hall, senior director of GE's North American lending division, central region, says that the loan is a good deal for a real estate icon. "It's very well-located, the River North region is an attractive location. You're close to Michigan Avenue and the Chicago River, which has drawn offices into one of the prime strips in the city." Other tenants at the building include the law firm of Swanson, Martin & Bell LLP and Oracle University.

According to a first quarter report by Grubb & Ellis, the River North market is enjoying the lowest vacancy rate in the CBD, and the most construction, with 2.5 million sf underway, more than half the amount now being built in the entire Chicagoland area. However, the new hotel planned for the 330 N. Wabash building will not have any real impact on the overall downtown office market, since its location is less desirable for most tenants, the report said.

It was fortunate for Prime Group to get financing at a time when the capital markets are very volatile and not many debt transactions are getting done, said the REIT's president and CEO Jeffrey Patterson in a statement. However, a GE spokeswoman says the credit crunch hasn't affected her firm much. "We're a balance-sheet lender, which allows us to operate well in this environment," she tells GlobeSt.com.