CRE Midwest

Prime Group Realty Trust closes on refinancing of 330 N. Wabash Ave.

Prime Group Realty Trust has refinanced its 330 N. Wabash Ave. property in Chicago with the proceeds of a $200 million first mortgage loan from Landesbank Hessen-Thuringen Girozentrale (Helaba Bank) and New York Life Insurance Company.

Prime Group Realty Trust has refinanced its 330 N. Wabash Ave. property in Chicago with the proceeds of a $200 million first mortgage loan from Landesbank Hessen-Thuringen Girozentrale (Helaba Bank) and New York Life Insurance Company.

The borrower under the loan is 330 N. Wabash Avenue LLC, which is owned by a joint venture between subsidiaries of PGRT and Five Mile Capital Partners LLC, a Connecticut-based commercial real estate and alternative investment firm.  Subsidiaries of PGRT are the property and redevelopment manager and leasing agent for the property.

"330 North Wabash is one of Chicago's significant architectural icons, and this refinancing reaffirms and builds upon the success we have had repositioning this asset in the marketplace," said Jeffrey Patterson, chairman, president and chief executive officer of Prime Group Realty Trust. "Today, the building is approximately 88 percent leased and is in the final stages of being fully modernized. Through this transaction, we will be even better positioned to fund additional tenant and other capital improvements and maintain the asset's strong position in the Chicago CBD office market and the flourishing River North area."

The loan consists of a $111.9 million initial advance to repay the existing first mortgage loan on the property and $88.1 million in subsequent advances for tenant and capital improvements and other costs, including interest expense, relating to recent leases that have increased the project's leased percentage to 88 percent from 35 percent. These major leases include leases with American Medical Association, Latham & Watkins LLP, SmithBucklin Corp., and BDO USA LLP.

The loan has a three-year term with a one-year extension option subject to the satisfaction of certain customary conditions.

The loan is secured by, among other things, a first mortgage on floors 13 to 52 of the building, which are owned by the borrower, as well as on the borrower's long-term leasehold interest in an adjacent 902 space parking garage. The interest rate on the loan is 30 day LIBOR plus 2.85 percent, and interest only payments are due monthly in arrears.

All remaining equity required by the loan to be funded by affiliates of Five Mile was contributed at closing, bringing Five Mile's total equity contribution to the joint venture to $69.7 million to date, which when combined with PGRT's equity contributions, total approximately $82.2 million.

The borrower utilized the mortgage banking services of Draper and Kramer in the transaction.