Vista Tower will be Chicago’s third-tallest building when it’s completed in 2020, but the ultraluxury condominium and hotel tower is already No. 1 in another category: the size of its construction loan.
The 94-story tower’s developers have borrowed $700 million from a Chinese bank in what is believed to be the largest construction loan ever issued in Chicago.
Chicago’s Magellan Development Group and its investment partner, China’s Dalian Wanda Group, on April 28 took out the loan from Ping An Bank, a subsidiary of Chinese conglomerate Ping An Insurance, according to Cook County property records.
The previous largest loan for a Chicago development had been the $640 million in debt Donald Trump used to finance his namesake tower on Wabash Avenue along the Chicago River, the city’s second-tallest building, long before he turned his aspirations toward the White House.
Most of Chicago’s largest properties were built decades ago, when costs were much lower.
Magellan President David Carlins declined to comment on the loan. He said more than 35 percent of the residential units are pre-sold in the tower. Sales range from one-bedroom units to full-floor penthouses. Carlins declined to say the dollar volume of the sold units, but it’s likely already in the hundreds of millions of dollars. The building’s 21 penthouses were listed for sale for $8 million to $10 million each.
“More than 80 percent of those buyers are local, and it’s spread out among the unit types, which we think is a positive,” Carlins said.
The $1 billion Vista Tower project, designed by architect Jeanne Gang, was already unique when it broke ground last year, backed by deep-pocketed Wanda. With 406 units, it’s by far the largest condo development to kick off since the recession. The project also will include about 190 hotel rooms.
“If you financed this locally, you’d be looking at multiple banks for a deal this size,” said Gail Lissner, vice president at Appraisal Research Counselors, a Chicago-based consulting firm. “They didn’t have to wait for the construction loan, which also sets this project apart. They were able to break ground and get to 35 percent pre-sales before getting the loan. For most developers, it’s the other way around. You get to 35 percent pre-sales, and then you break ground.”
Workers recently poured concrete for the second floor. The core of the building at 363 E. Wacker Drive has reached above Upper Wacker Drive.
Although it’s the largest construction loan ever made in Chicago, it’s not the largest amount for a commercial real estate loan in 2017. Earlier this year, Blackstone Group refinanced the city’s tallest building, the 110-story Willis Tower, with just over $1 billion in new debt.
Because Vista Tower’s loan is for a ground-up development expected to take years to complete, it could be viewed as an endorsement of the Chicago commercial real estate market, which has soared in recent years, said mortgage broker Dave Hendrickson, a managing director at Jones Lang LaSalle.
“It’s a fantastic endorsement of Chicago,” Hendrickson said. “But that project is so high-end and so big, it’s almost apples and oranges to everything else in Chicago.”
It’s not the first time Ping An and Wanda have done business. Last year, Ping An provided an approximately $660 million loan for a condo and hotel tower Wanda is developing in London.
In Chicago, Ping An is an investor in Miami developer Crescent Heights’ planned One Grant Park residential tower along the southern end of Grant Park. Ping An has committed more than $100 million of equity to the project, Chicago-based Crescent Heights Vice President Jason Buchberg said.
As for its $700 million loan, Ping An will hope for better timing than Deutsche Bank’s turned out to be with Trump Tower, which was completed in 2009.
That 2005 loan turned into a messy legal battle with a group of lenders led by Deutsche Bank. The loan and other controversial Trump deals were back in the news last year amid Trump’s successful presidential run.
The economy crashed as the tower was constructed, and Trump defaulted on the loan.
Trump and Deutsche Bank sued each other in 2008. The bombastic developer said the crippling recession was a “once-in-a-lifetime credit tsunami” that affected his ability to sell condos, and sought $3 billion in damages from the bank. Deutsche Bank said Trump owed $40 million in personal guarantees he’d made on the debt. Both sides suspended their lawsuits in 2009, allowing Trump more time to sell units and eventually pay off the past-due loan.