CHICAGO—Citizens Financial Group recently helped complete a $296 million construction loan to finance the development of 150 N. Riverside, one of several new office towers beginning to rise along the Chicago River in the West Loop. The O'Donnell Investment Co. began construction on the 53-story, 1.2-million-square-foot building in July and the loan closed in August, Citizens' officials tell GlobeSt.com. The bank was the joint lead arranger and joint bookrunner along with Bank of America and Helaba.
“Chicago is an important market for us,” says Gary Magnuson, head of commercial real estate finance at RBS Citizens, the commercial banking arm of the Providence, RI-based Citizens Financial Group, and “we think the location is a winner.” Their confidence was further bolstered by the “significant amount of equity that was put together by O'Donnell.”
Wanxiang America Real Estate Group, a subsidiary of the China-based manufacturer Wanxiang Group Inc., and another partner provided about $200 million in equity for the project, located between Lake and Randolph streets. The site will offer easy access to public transportation and views of the river and downtown Chicago, Magnuson says, and a 1.5-acre public park surrounding the property will help create a river walk area for city residents and tourists.
“We don't do spec lending, so there also had to be a significant amount of pre-leasing,” he adds. And late last year, the investment banking and asset management firm William Blair & Co., now at 222 W. Adams St., signed a letter of intent to lease 300,000-square-feet for a new global headquarters in the Riverside tower beginning in 2017.
“This was a time-sensitive loan request and it was great to work with this team of RBS Citizens bankers,” says John O'Donnell, president of the O'Donnell Investment Company. “We selected them, along with the other bankers in the group, over several others, because of our confidence in these banks to complete the due diligence and documentation in a fair and timely manner.”
“The primary tenant needed to be in there and give notice to their current landlord,” Magnuson explains, although the deal “operated under a relatively normal timeline.” RBS Citizens began working on the loan about five months ago.
This corner of the CBD and the amenities it will provide office users has attracted a great deal of interest from developers. In addition to O'Donnell, for example, Hines has launched the development of River Point tower at 444 W. Lake St., set for delivery in 2017.
But Magnuson remains very confident that this competition won't stop O'Donnell from filling up the Riverside project. “All tenants are justifying their space needs,” he says, “and operating more efficiently in the spaces they have.” But once these West Loop projects open for business, the downtown will have gone about seven years without significant new top-of-the-line product. “We believe that there is sufficient amount of demand for this type of class A space.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
