J.P. Morgan Chase Commercial Mortgage Securities Corp. has filed a prospectus related to its commercial mortgage-backed securities (CMBS) transaction, J.P. Morgan Chase Commercial Securities Trust 2014-C20, which is comprised of 37 mortgage loans secured by 54 commercial and multifamily real estate properties with an aggregate initial pool balance of approximately $878 million.
Included is information on the $75 million loan on 200 West Monroe, which is secured by a first mortgage lien on 535,538 square feet of office and retail space in the 23-story, 649,265 square foot building in Chicago.
The 200 West Monroe Whole Loan has a 10-year term and, subsequent to a five-year interest-only period, will amortize on a 30-year schedule.
The borrowing entity for the 200 West Monroe Whole Loan is BRI 1861 200 W Monroe, LLC. The loan sponsors and non-recourse carveout guarantors are Gimmel Investment Properties, LLLP and Gimmel Investment Properties (US), LLLP, which are both Florida limited liability limited partnerships. The loan sponsors are affiliated with Beacon Investment Properties, a real estate investment and property development group based in Hallandale Beach, Florida.
The loan sponsors purchased the property for approximately $75.0 million from affiliates of Lubert Adler and The Farbman Group.
Constructed in 1973 and most recently renovated in 2006, 200 West Monroe is a 649,265 square foot, Class B office building, of which 535,538 serves as collateral for the loan. The 535,538 square feet of collateral for the loan consists of 499,148 square feet of office space and 36,390 square feet of retail space.
In 2005, the building was vertically subdivided to accommodate the sale of low-rise space to the Jewish Federation of Metropolitan Chicago. The Jewish Federation of Metropolitan Chicago has an interest in 113,354 square feet of self-contained space, which is not included in the loan’s collateral, and pays a pro rata share of the building’s operating expenses.
As of March 4, 2014, the property was 84.2% leased by 45 tenants. From January 2013 through March 2014, there were 13 leases executed at the property totaling approximately 55,528 square feet (10.4% of the net rentable area).
The largest tenant in the building is Select Hotels Group, a subsidiary of Hyatt Hotels, which pays $18.78 in base rent per square foot to occupy 74,067 square feet, or 13.8% of the net rentable area, through March 2016. Hyatt Hotels recently consolidated all of its financial and corporate offices from Oakbrook, Illinois to the Select Hotels Group’s office space at 200 West Monroe so that these operational functions are now less than a block away from Hyatt Hotels’ headquarters.
200 West Monroe’s second largest tenant, Equinox Fitness, pays $33.37 per square foot to occupy 33,952 square feet, or 6.3% of the net rentable area, through March 2024. Equinox Fitness represents the majority of the ground and second floor retail space.
The third largest tenant is AMLI Residential, which pays $18.86 per square foot to occupy 29,863 square feet, or 5.6% of the building’s net rentable area, until January 2019. AMLI Residential is a private real estate company that focuses on the development, acquisition and management of luxury apartment communities across the United States. In 2006, AMLI Residential was acquired by PRIME Property Fund, a core, open-ended, institutional real estate fund managed by Morgan Stanley that owns or has an investment interest in approximately $11.0 billion of diverse real estate assets located in major markets in the United States.
No other tenant occupies more than 5.6% of the net rentable area.
200 West Monroe is approximately four blocks east of Union Station and four blocks northeast of Ogilvie Transportation Center on the western edge of the Central Loop submarket. The submarket’s more than 44.4 million square feet of office inventory is comprised of approximately 21.1 million square feet of Class B office space which has a vacancy rate of 15.3% and average rents of $30.19 per square foot as of the fourth quarter of 2013, according to the building’s appraisal.
The appraisal identified six directly competitive properties built between 1961 and 1985 and ranging in size from approximately 537,000 square feet to 755,000 square feet. The comparable properties reported occupancies ranging from 64.2% to 98.2% with a weighted average occupancy of 86.9%. Asking rents for the comparable properties range from $16.00 to $23.00 per square foot.
The whole loan on the asset is comprised of two pari passu notes, Note A-1 and Note A-2. Note A-1 has an outstanding principal balance as of the Cut-off Date of $50.0 million and is being contributed to the JPMCC 2014-C20 Trust. Note A-2, with an outstanding principal balance as of the Cut-off Date of $25.0 million, is currently held by JPMCB and is expected to be contributed to a future securitized trust.