Blackstone Secures 3-Year Extension for Willis Tower’s $1.3B CMBS Loan 

Blackstone has secured a three-year extension for its $1.3 billion commercial mortgage-backed securities (CMBS) loan on Willis Tower in Chicago, Commercial Observer has learned. 

Blackstone reached an agreement with lender and servicer KeyBank and locked in the extension ahead of the debt’s March maturity date, sources said. The loan has been transferred to special servicing in order to effectuate the modification, which extends the CMBS loan’s term out by three years and gives Blackstone two additional one-year extension options on top of that.

The special servicing transfer was documented in a Trepp report on Tuesday. 

“This extension reflects our continued belief in the strength of Willis Tower,” a Blackstone spokesperson told CO. “We believe the building’s transformative renovation has positioned it for success, as demonstrated by over 400,000 square feet of leasing in the past 18 months and more than one million annual Skydeck visitors.”

That recent leasing activity includes an 84,000-square-foot lease with Adtalem Global Education.

United Airlines is the largest tenant at Willis Tower, occupying 753,000 square feet and paying roughly $25 million in rent per year. United renewed its lease in 2019, signaling its commitment to the building. Its new lease expires in 2033, and Willis Tower serves as the company’s global headquarters.

Willis Tower, previously known as Sears Tower, stands 110 stories tall at 233 South Wacker Drive in Chicago’s South Loop neighborhood. It was once the tallest building in the world but now stands as the third-tallest in the Western Hemisphere. 

The building’s Skydeck Observation Deck — featured in “Ferris Bueller’s Day Off” — attracts 1.7 million visitors each year, according to a DBRS Morningstar ratings report. Skydeck underwent a renovation in 2021, and its visitors tally continues to increase by approximately 15 percent year-over-year, sources said. The tower’s 300,000-square-foot retail component includes an interactive museum with access to the Skydeck. 

Its $1.3 billion CMBS loan was originated in 2018 and placed in the — aptly named — BBCMS 2018-TALL single-asset, single-borrower CMBS deal, with a fully extended maturity date of March 2025. As of April 2023, Blackstone had invested close to $500 million in the office, retail and Skydeck components of the building, per the DBRS report. 

Chicago was hit especially hard by office distress, with 75 percent of the city’s CMBS balance collateralized by office buildings in distress last May, according to a KBRA report, but Willis Tower’s loan extension represents Blackstone’s belief in the building’s positioning as flight-to-quality continues in U.S. traditional office space, sources said. 

And, with new leasing activity and an extended loan term, the iconic tower seems set for its next chapter in the Chicago skyline, and plenty more foreheads pressed against its Skydeck’s glass. 

As character Sloane Peterson said in “Ferris Buller’s Day Off, “The city looks so peaceful from up here.” (To which Bueller replied, “Anything is peaceful from 1,353 feet.”) 

Cathy Cunningham can be reached at ccunningham@commercialobserver.com.