Simon Singer’s FTK Capital Acquires Chicago Office Building for $25M via Note Sale

A Chicago office building has changed hands and is beginning a new chapter, Commercial Observer has learned. 

The 560,000-square-foot property at 111 West Jackson Boulevard in the city’s central business district, the Loop, was purchased by Simon Singer’s FTK Capital after the firm purchased the debt on the building for $25 million and completed a cooperative transfer of the deed from its previous owners, the Melohn Group, sources said. 

Melohn Group purchased the building for Berkley Properties for $135 million — or $242 per square foot — in 2014, according to CoStar Group, refinancing its debt with a $105 million loan from Natixis in 2017, which was placed in the UBSCM 2017-C6  and CSAIL 2018-CX11 CMBS conduit deals. 

The building was placed in special servicing in March 2023 and creditors filed a foreclosure complaint against the Melohn Group the previous November after the firm missed payments on the building’s $105 million commercial mortgage-backed securities (CMBS) loan, The Real Deal reported at the time. Iron Hound Management’s Kevin Thompson and Jack Casper then led negotiations with the CMBS trust to restructure the debt and brought in FTK Capital as the note buyer, sources said, with Melohn being fully cooperative and solution-oriented in achieving a resolution. 

Stream Realty has been engaged by FTK Capital to manage and lease the property going forward. The Chicago-headquartered company manages and leases around 37 million square feet across suburban office, downtown office, industrial and urban retail, and Matt Lerner, executive vice president at the firm, will be leading the charge at 111 West Jackson. 

Occupancy currently stands at around 48 percent. That’s likely about to change, with FTK Capital ready to inject significant capital for building improvements, amenity upgrades and tenant leasing. 

“We were brought in to assist FTK in the repositioning of this asset,” Victoria Knudson, a partner at Stream Realty, told CO. “They purchased it at the right price and now we have an opportunity to really reintroduce the asset to the market, and that includes several improvements that the landlord is going to be making. They’ve got money to spend. We’re going to be building out the amenities and some spec suites, and — based on the basis that they paid for it — they can be very competitive in the market as it relates to rates. They’re very hands-on-type of owners, so they’re very deal focused and their principals are here to do deals, which is encouraging.” 

Further, [FTK]  is well capitalized, which is a big differentiator when it comes to distressed assets, Knudson said: “From our management standpoint, we’re looking at, ‘How do we create value?’ And ‘How do we look at managing this asset in its current condition, how do we reduce expenses based upon current occupancy, and then how do we ramp that back up as we start to fill the building?’”

The 25-story building was erected in 1961, renovated in 2013, and includes 20,543 square feet of first-floor retail. From an amenities standpoint, a conferencing center,  fitness center and new food and beverage offerings will be top of mind to enhance the building in its next chapter. Its location is an amenity, too, just off Wacker Drive and close to transportation options.

“We’re going to enhance the other areas so that we’re really creating an experience for people who come to the building,” Knudson said.  

Like New York, tenants’ drastic flight-to-quality pendulum swing post-pandemic has since leveled out in Chicago. As a Class B building, 111 West Jackson Boulevard will likely welcome back-office-type tenants drawn to its desirable location and new amenities in its next iteration. 

“I think one of the other trends that we’re seeing in Chicago, which is probably similar to New York, is tenants interviewing the owners of the property to make sure that they have the capital to be able to do the deals that are necessary to get the buildings where they need to be,” Knudson said. “That’s become much more of a driver than it has in years past.” 

And, with 111 West Jackson now in the hands of its new ownership, Stream Realty is wasting no time in moving the building forward. 

“The transaction closed March 4 and hit the ground running, with the full-court press,” Knudson said. “It’s all happening.” 

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