JBC Lands $233M Loan for Chicago’s CNA Center
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The John Buck Co. teamed up with HFF and Bank of the Ozarks to secure construction financing for the 35-story office tower.
By Barbra Murray, Contributing Editor
Chicago—The John Buck Co. can cross construction financing off its to-do list for CNA Center, the 810,000-square-foot Chicago office property that will house the new global headquarters of insurance organization CNA. With the assistance of commercial real estate and capital markets services provider HFF, JBC reeled in a $233.3 million loan from Bank of the Ozarks.
From a lenders’ perspective, JBC made all the right moves. Before breaking ground on the 35-story trophy office tower at 151 N. Franklin St. in Chicago’s West Loop, the well-regarded real estate operating company landed a lease commitment for 275,000 square feet from CNA, and signed a 100,000-square-foot lease agreement with Hinshaw & Culbertson LLP for the law firm’s national headquarters. And JBC picked the right location to build. The West Loop submarket is starving for trophy accommodations, owing to a sustained demand for modern and efficient office space, according to a report by commercial real estate services firm Savills Studley. CNA Center will answer the call; the property will have all the bells and whistles—4,200-square-foot rooftop terrace with bar included.
The capital markets have grown increasingly friendly over the last few years, but securing nearly a quarter-billion dollars in financing is still no simple feat, no matter the positive fundamentals. “The Chicago office market has continued to tighten over the past five years with only 3 percent or so of total inventory anticipated to be added in this decade. That said, coming out of the global financial crisis there has been financial and regulatory pressure to ‘de-risk’ new developments so it is simply harder to capitalize new construction—more equity, less senior loan, more preleasing, stronger metrics,” Michael Kavanau, senior managing director with HFF, told Commercial Property Executive. “There are also fewer and fewer premier sites available in Chicago, and only the best capitalized developers/investors can play in this environment. However, when you do have the combination of best sponsor, location, preleasing and team you get a very strong response from the lending community, as was the case with CNA Center.”
Construction of CNA Center, designed by John Ronan Architects and Adamson Associates, is being spearheaded by Lend Lease. JBC expects to welcome the first tenants to the glass curtain wall-enclosed building in summer 2018.