Sterling Bay Gets $220M Refi for 1KFulton

CHICAGO—Mesa West Capital has provided Sterling Bay with $220 million to refinance its 1KFulton project in the West Loop. The Chicago-based developer bought the former Fulton Market Cold Storage warehouse in 2012 and renovated it into a 535,000-square-foot office building that Google will soon use as its new regional headquarters. This and other Sterling Bay projects have already helped transform the neighborhood from an industrial zone mostly dedicated to food production and distribution and into a high-end office community.

The financing was arranged by HFF. Senior managing director Michael Kavanau, managing director Tim Joyce and real estate analyst Christopher Knight led the debt placement team. The financing included $35 million of mezzanine debt, which was placed with Morgan Stanley Real Estate Investing. Sterling Bay used the loan proceeds to retire existing debt and fund remaining project costs.

1KFulton “showed up on every real estate player's radar screen when talking about any asset within a radius of a few miles," says Kavanau. "Google's significant commitment to the location was noted in nearly every offering memorandum and committee presentation in the past couple of years.”

The search engine giant will occupy 357,928-square-feet in the nearly 100-year-old structure. Other long-term tenants include bicycle gear maker SRAM International Corp., venture capital firm Sandbox Industries and BOKA restaurant group. The building, now LEED Gold certified, was 88% leased at the time of financing. New amenities include an on-site fitness center, rooftop common areas, on-site ZipCars, secure bike room, on-site auto detailing, on-site bicycle repair and a 156-space basement parking garage featuring electric car charging stations.

“1KFulton is a transformative real estate project that is redefining downtown Chicago's River West submarket,” says Ronnie Gul, a principal with Los Angeles-based Mesa West, who originated the loan. “The property is backed by strong sponsorship with deep experience in the market," adds Mesa West assistant vice president Brandon Bachner, "which provided a competitive edge in leasing the asset and securing Google as the anchor tenant.”