Customer successes

Background and Customers Goals

At a time of great stress on the U.S. banking system, GE Capital Real Estate led a creative lending relationship that provided $188 million to refinance and reposition one of Chicago’s landmark office buildings. Knowledge of the local market and close collaboration between GE Real Estate and the first mortgage lender ensured that we could close the deal for our customer.

Prime Group Realty Trust (PGRT) is a REIT in the Chicago area, with extensive experience in value creation strategies and large leasing transactions. One of PGRT’s signature holdings is the former IBM Plaza, a 52-story Class A office building designed by Ludwig Mies van der Rohe and designated as a Chicago landmark in 2008. Despite the volatile capital markets, PGRT sought financing to recapitalize and reposition this historic downtown building.

The GE Capital Real Estate Solution

GE Real Estate’s North America Lending group helped structure a complex deal that would satisfy PGRT’s financing needs while providing protection for all lenders during this period of market dislocation. GE Capital Real Estate provided initial funding of $50 million, in the form of an on-book bridge loan, which accompanied an $88 million first mortgage from ING Investment Management.

As part of the refinancing, PGRT sold 12 lower floors of the building to a joint venture controlled by LaSalle Hotel Properties to be developed into a 5-star hotel. This reduced excess office space in downtown Chicago, presumably adding value to the building’s remaining inventory.

GE Capital Real Estate’s five-year interest only loan provides an additional $50 million to PGRT to reposition space when a major tenant vacates its space in 2010. The broker for the loan transaction was Draper and Kramer of Chicago.

Teamwork Overcomes All Obstacles

The deal closed during great market uncertainty in the capital markets – on the same day that the brokerage firm Bear Stearns failed – demonstrating GE’s capital strength and ongoing commitment to our customer and the CRE market.

To meet PGRT’s needs at this difficult time, GE Real Estate formed a co-lending relationship with ING Investment Management to structure and execute a complex yet flexible loan transaction. Because of the success of this deal, ING and GE are exploring additional co-lending opportunities.

Finally, the deal allowed PGRT to implement its value creation strategy for an architecturally significant office tower in a vital business location.