NorthStar and Deutsche Bank Set to Land John Hancock Center

By Gabriel Circiog, Associate Editor The battle for the landmark John Hancock Center is set to end as a partnership that includes Deutsche Bank AG and NorthStar Realty Finance Corp. acquired all three pieces of junior debt on the Michigan Avenue skyscraper, Chicagorealestatedaily.com reports. After buying $218 million of loans, which includes $98 million partially [...]

The battle for the landmark John Hancock Center is set to end as a partnership that includes Deutsche Bank AG and NorthStar Realty Finance Corp. acquired all three pieces of junior debt on the Michigan Avenue skyscraper, Chicagorealestatedaily.com reports.

After buying $218 million of loans, which includes $98 million partially owned by a fund managed by John Buck Co., the German bank and the New York-based real estate finance company are outmaneuvering other investors coveting the 100-story tower.

A joint venture between Goldman Sachs Group Inc.’s Whitehall Fund and Golub & Co. currently owns the building located at 875 N. Michigan Avenue, while Golub is also handling the leasing and management of the property.

The John Hancock Center, completed in 1970 and designed by Skidmore Owings and Merrill, is the fourth-tallest building in Chicago and the sixth-tallest in the United States. The takeover move targets only the 897,000 square feet of Class A office space and 172,000 square feet of retail space which, according to a loan report from Bloomberg LP, is currently 71 percent occupied. The building’s 700 luxury residential condominiums are privately owned.

After failing to pay back $400 million in debt at maturity, the ownership group defaulted on the loan. Blackstone Group LP, a private-equity firm based in New York, also made a move for the tower by purchasing a piece of subordinate debt alongside John Buck Co.

Deutsche Bank and Northstar, however, took pole-position by acquiring a more junior piece of debt and paying off Blackstone and Buck. On top of the $218 million in junior debt on the property, the two companies still need to deal with a $182.4 million senior loan also in default and held by investors in CMBS.

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