T
he Olayan Group is in advanced talks to acquire the 35-story office tower at 401 North Michigan Avenue, a prime location on Chicago's Magnificent Mile. The Saudi Arabian enterprise, led by CEO Hani Lazkani, aims to buy the building at a price significantly lower than its 2019 valuation. According to CoStar, the deal would value the 811,000-square-foot property between $120 million and $130 million, roughly 25% less than the $160 million loan secured on the building five years ago by Walton Street Capital.
The office tower's lender, ING, is expected to provide new financing for the transaction, taking a loss on the original loan. However, the agreement has yet to be finalized and could still fall apart. Despite $17.2 million in capital investments since its purchase in 2017, the building is now slated to be sold at a steep discount.
The sale would underscore the challenges facing Chicago's commercial landlords, including declining demand for corporate space, sluggish leasing activity, and a high vacancy rate. Olayan Group has been capitalizing on declining property values in key markets, owning high-profile assets such as the 550 Madison Avenue tower in New York and the Mandarin Oriental hotel in Barcelona.
If the deal closes, it would represent another instance of discounted office sales in the city, following other transactions currently in the works, including Glenstar's negotiations to acquire the 41-story office tower at 200 South Wacker Drive.
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