2.8M SF Aon Center Goes Back To Special Servicing
The Aon Center, a massive office building at 200 E. Randolph St., is returning to special servicing three years after it first made a stop.
601W Cos., the borrower on the nearly 2.8M SF property, did not make a required payment for tenant improvements and leasing commissions, and the loan entered special servicing on Feb. 12, according to Morningstar Credit.
Servicer commentary indicated that 601W Cos. is unlikely to repay the loan at maturity in July 2026.
The company could not be immediately reached for comment.
Occupancy at the building dropped to 66% as of September, down from 88% when JPMorgan Chase issued a $536M loan for the property in 2018. The building's 2024 net cash flow was down 12% from 2023 and almost 30% below levels at issuance.
As of September, the building's top five tenants included Aon, KPMG, JLL, Kraft Heinz and WEC Business Services, according to Morningstar data. Aon takes up 264K SF, while KPMG leases 235K SF and JLL makes up 201K SF.
Lease rollover is not expected to be significant through September 2028, as only 10% of tenants by SF have expiring leases, according to Morningstar data.
The loan entered special servicing in February 2023, was modified, and received a three-year extension later that summer. When the building was reappraised in 2023, its new valuation of $414M was almost half the $780M valuation at the time of JPMorgan's underwriting.
When the Aon Center was reappraised, The Telos Group President Brian Whiting — whose firm is the building's leasing agent — told Bisnow the property was healthy and had $100M in cash to do deals. He said the devaluation had nothing to do with the building's fundamentals and was driven by changes in the interest rate environment.
With the building's looming maturity date and return to special servicing, the property's next steps are not immediately clear.
601W Cos. has not shied away from acquiring more Chicago office of late, forming a joint venture with David Werner Real Estate Investments to buy the 1.4M SF office building at 175 W. Jackson Blvd. for roughly $41M in early February.
