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CHICAGO-Michigan Plaza LLC, an affiliate of New York City-based Loeb Partners Realty LLC, has obtained permanent, fixed-rate financing for Michigan Plaza. The $232-million mortgage will replace the acquisition financing the company used to purchase the two-building, class A office complex.
Geoffrey Rice, a director in CBRE | Melody's New York City office, tells GlobeSt.com that the timing for the financing was based on simple economics. "Rates were rising, so it was a good time to lock in a fixed rate," Rice says. "As Libor has risen, the cost of debt services and loans has risen." Loeb Partners acquired the complex in 2005 for $266.3 million.
Michigan Plaza consists of two connected buildings with a total 1.9 million sf. The 44-story building at 205 N. Michigan Ave. has 969,500 net rentable sf, and the 25-story 225 N. Michigan Ave. has approximately 963,000 of net rentable sf. Tenants include Blue Cross Blue Shield, MCI Telecommunications, Fox Television Studios, American Cancer Society and Unilever.
In March, Omnicom Group Inc. increased its space at the center by 36%, signing a 90,000-sf renewal. The New York-based tenant, whose subsidiaries include OMD Worldwide, Porter Novelli public relations and GMR Marketing, has been a tenant since 1999. Although terms were not disclosed, published asking lease rates at the 25-story and 44-story buildings start at $26 per sf. The deal reduced vacancy at Michigan Plaza to 8%.
Morgan Stanley Mortgage Capital, Inc. provided the funding on behalf of Loeb Partners Realty's affiliate. Rice, along with John Clifford, managing director in CBRE | Melody's Chicago office, secured funding for this transaction.
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