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February 09, 2018  

Barclays Nabs $1.5 Billion Willis Tower Loan

Barclays has won the plum assignment to lead a $1.5 billion loan to Blackstone on Chicago’s Willis Tower.

Deutsche Bank will fund a portion of the seven-year floater, and the two banks will securitize $1.2 billion of the debt in a stand-alone commercial MBS deal sometime next month. The remaining $300 million will be structured as future funding, to be provided over time as improvements are made to the iconic, 3.8 million-square-foot skyscraper.

Blackstone will use most of the proceeds to retire a $1 billion mortgage provided last February by Goldman Sachs, Bank of America and Citigroup and securitized in a stand-alone deal (CST 2017-SKY). That loan had a two-year term and three one-year extension options, but it is prepayable without penalty starting next month. At the time it was originated, the property was appraised at $1.52 billion.

The 110-story building, at 233 South Wacker Drive in the West Loop district, was formerly known as the Sears Tower and was the tallest building in the Western Hemisphere until the completion of the rebuilt One World Trade Center in 2014.

Blackstone is in the midst of a roughly $550 million renovation of Willis Tower. The work includes expanding the retail space in the building’s base, upgrading office space and adding attractions to the 103rd-floor Skydeck, which offers panoramic views of the city’s skyline. Blackstone plans to kick in $110 million of equity to fund the improvements.

The fund giant, operating via its $13.3 billion Blackstone Real Estate Partners 7 vehicle, acquired Willis Tower in 2015 for $1.3 billion from a joint venture between New York investor Joseph Chetrit and American Landmark Properties of Skokie, Ill.