Blackstone has successfully negotiated a sixth loan extension for the $1.3 billion debt on Chicago's Willis Tower, pushing the maturity date to at least 2028, with two one-year extension options potentially extending it to 2030. This comes after the loan, originated in 2018, was briefly transferred to special servicer KeyBank before the agreement was finalized. The deal allows Blackstone to avoid paying down any principal or increasing the interest rate at the time of the extension, although it will need to contribute $25 million in equity for each one-year extension after 2028.
The extension was secured despite a recent appraisal valuing the Willis Tower at $1.03 billion, significantly lower than the $1.325 billion outstanding loan balance and the $1.78 billion valuation from 2018. However, Blackstone's lawyers had previously argued for a lower tax valuation of $999 million. The property's net operating income has shown improvement, reaching over $119 million in 2024, up from about $118 million in 2023 and less than $86 million in 2022. Morningstar Credit data indicated the property's cash flow in 2023 exceeded the underwritten $101.8 million, reaching over $110 million.
Blackstone, which acquired the Willis Tower in 2015 for $1.3 billion, has invested more than $500 million in renovations that concluded in 2022, improving amenities and adding retail and entertainment. Despite the recent valuation challenges, Blackstone remains optimistic about the tower's performance, citing over 400,000 square feet of leasing in the past 18 months and more than 1.2 million annual Skydeck visitors. A revised private appraisal also projects the building's value could rise to $1.6 billion by 2027.
Currently, there are discussions about how Blackstone might eventually exit its investment, which could exceed $2 billion when factoring in their original purchase, renovations, and property taxes. Selling the tower at a price that would cover the loan and generate a profit in the current market is considered challenging. Alternatives include a loan assumption by a new buyer or further loan modifications.
