Bank of China (Chicago Branch) reschedules — via a one-year maturity extension — of a $163 million USD loan for the 200 South Wacker Drive 2019 Refinancing Project

Project narrative

In 2019, the Chicago Branch of the Bank of China (BOC) entered into a $163 million USD loan agreement with Manulife Investment Management Holdings (Canada) Inc. (MIM) — the Canada-incorporated wholly-owned investment management arm of Manulife Financial Corporation, a Canada-incorporated and based insurance company — for the 200 South Wacker Drive 2019 Refinancing Project. This loan carried a maturity period of approximately years. The loan was secured by (i.e. collateralized against) 200 South Wacker Drive. The proceeds were to be used by the borrower to refinance 200 South Wacker Drive, a 40-story 762,000-square foot office tower alongside the Chicago River at the southwest corner of the Chicago Loop of downtown Chicago, Illinois. Record ID#105755 captures the loan. Due to the boom in remote work because of the COVID-19 pandemic and higher interest rates, Chicago's office real estate sector experienced many challenges, with refinancing existing balloon debts upon maturity very difficult, including the BOC loan for 200 South Wacker Drive. While 82% leased as of 2023 and with a net operating income of nearly $12 million USD, the occupancy of South Wacker Drive had declined from 96% when Manulife had originally purchased. In September 2022, Manulife entered into an agreement with BOC; Manulife would pay down a portion of the BOC loan (approximately $10 million USD) in exchange for a year-long maturity extension — a new maturity period of approximately four years — and a new final maturity date in or around September/October 2023, giving the borrower more time to sell the building and repay the loan. BOC reduced the principal loan amount to $151.3 million USD. Record ID#105756 captures the extension. In late 2022, Manulife put up the building for sale at a listing of $170 million USD, which would have allowed the loan to be fully repaid, but be a huge loss in property value for Manulife which had purchased the property for $215 million USD in 2013 (and the $8.5 million USD it spent renovating the building after wards). On October 19, 2023, BOC filed a lawsuit in Cook County court against Manulife, claiming the loan was now in default and seeking an order to allow for the sale of the building to satisfy the debt, in whole or part (foreclosure), and the appointment of a receiver by the court for the building to take over its operations until the court case concluded. In June 2024, BOC, via JLL, was seeking buyers for the property.