Regions Bank Offloading O’Hare Office Loan

Regions Bank gave up on trying to sell a suburban Chicago office complex and is instead shopping the troubled loan behind it.

The Alabama-based lender is marketing a $47.5 million defaulted loan tied to the O’Hare International Center, a two-building, 530,000-square-foot office complex in Rosemont, Crain’s reported. The default amount comes to $90 per square foot.

The note is being sold as a “deed-in-escrow” opportunity, giving the buyer a quick takeover of the property from an affiliate of Utah-based Bridge Investment Group, according to JLL.

The 1984-built complex, at 10255 and 10275 Higgins Road, includes two nine-story buildings and a large parking garage with more than 1,800 spaces. JLL’s Tom Hall, Kyle Kaminski, Pat Shields and Sam DiFrancesca are handling the listing, with bids due June 18.

Bridge defaulted on the loan when it matured in January 2023, prompting Regions to explore a sale that ultimately failed. The bank and borrower listed the property in early 2023, aiming to recover most of the roughly $72 million invested, including a $64 million ($121 per square foot) acquisition in 2018 and about $8 million in upgrades. But no buyer materialized.

Regions is betting that a discounted debt sale will succeed where a straight property sale didn’t, amid Chicago’s grim suburban office market. Class B properties like the International Center, despite being 78 percent leased, have struggled to retain tenants since the pandemic as demand shifts to more modern or highly amenitized buildings.

A nearby Class A office complex, Presidents Plaza, sold last year for about $75 per square foot. The International Center is older and carries a higher vacancy risk despite a four-year weighted average lease term and a location near O’Hare Airport.

Chicago’s suburban office market has shed nearly 4.7 million square feet of tenants since early 2020, pushing the vacancy rate to a record 32 percent, per JLL. Investors are hesitant to touch office assets, particularly those with looming lease expirations and uncertain long-term demand.

— Judah Duke