UPDATE: Kohan Retail Investment Group has just acquired a distressed mortgage valued at $60 million tied to the struggling 33 West Monroe Street office tower in Chicago’s Loop. This strategic move marks a significant expansion of Kohan’s footprint in the city’s beleaguered real estate market, where property values have plunged since pre-pandemic peaks.
The 28-story tower, encompassing around 900,000 square feet, is currently only 44 percent leased, reflecting the ongoing challenges facing commercial real estate in the area. Kohan’s recent acquisition, which translates to approximately $67 per square foot, underscores the dramatic drop in market values and highlights the opportunistic nature of real estate investments during this downturn.
This mortgage was sold by a venture of Principal Life Insurance, which had the debt under contract last month for a staggering $25 million. This price point emphasizes the extent of the financial distress affecting the Loop, making it one of the most notable data points in recent transactions, as detailed by The Real Deal.
Kohan has positioned itself to gain control of the 33 West Monroe property should AmTrust RE, the current owner, default on its obligations. This acquisition is part of a broader strategy for Kohan, which has been actively purchasing both distressed properties and their corresponding debts, signaling a robust play in a challenging market.
In a related move earlier this year, Kohan purchased the 65-story tower at 311 South Wacker Drive for roughly $45 million, showcasing its willingness to invest in marquee assets at significantly reduced prices. These acquisitions indicate a dual strategy of acquiring undervalued buildings alongside the debt associated with them, as reported by CoStar News.
AmTrust RE is currently facing serious financial headwinds, having recently lost the 30 North LaSalle property to a lender takeover. They are also dealing with a looming foreclosure lawsuit related to a $260 million mortgage tied to the Illinois Center. These mounting pressures have rendered several of AmTrust’s assets vulnerable, prompting opportunistic bids from investors like Kohan.
The implications of Kohan’s latest acquisition are far-reaching. Buying distressed loans allows investors to explore various options, including negotiating a workout, foreclosing, or converting the space—removing it from the market entirely. Kohan’s interest in potentially converting 311 South Wacker into a hotel reflects the innovative approaches buyers are considering when they control the capital stack.
As the situation develops, all eyes will be on Kohan Retail and its next moves in the Chicago market. The firm is not only reshaping its portfolio but also potentially influencing the future landscape of the Loop amidst a significant real estate crisis.
Stay tuned for more updates on this developing story as Kohan’s strategy unfolds in the coming weeks.
