blackstone is in talks with lenders on a 310 million senior loan coming due in july a preliminary step because default risk on the office building is rising blackstone inc began talks with its lenders about options on a maturing 3098 million senior loan on a 13 millionsquarefoot office complex in the river north section of chicago just across the main branch of the chicago river from the loop central business district blackstone bx remains current as of its last payment on may 9 on the class a office complex at 350 n orleans st which connected by pedestrian bridge to the citys famed merchandise mart competes with highpremium addresses in its location but the debt has transferred to special servicing according to creditrating firm kbra transferring a loan to special servicing signals a kickstart of discussions between a borrower and a lender when loans in bond deals look to be at risk of default the loan comes due in july blackstone one of the worlds largest investors in commercial real estate has long been a favored borrower for wall street often receiving the lowest lending rates available and ample access to debt but more borrowers with maturing debt this year have been seeking debt extensions loan modifications or simply handing back properties to lenders as an era of cheap and abundant credit has ended relateddebt on trophy office buildings is starting to buckle as loans come due in a sign of the times for beleaguered office buildings as more workers take advantage of workfromhome or hybrid arrangements with their employers blackstone wrote down its investment in the chicago property acquired from shorenstein realty services in 2015 with past owners including vornado vno and heirs to us political paterfamilias joseph p kennedy to zero last year that means it no longer has an economic value which can occur when the debt on a building exceeds the value of the property tenants of the former apparel center once home to some 1000 appareltrade showrooms have included the chicago suntimes in the years after its nearby midcenturymodern headquarters was demolished to make way for trump international hotel  tower chicago and a holiday inn hotel the property is experiencing the wellknown headwinds facing us traditional office buildings lacking firstclass modern amenities and this location in the river north submarket has been particularly challenging which is why we effectively wrote this investment down to zero last year blackstone said in a statement occupancy of the building conjoined with the renovated art deco masterpiece merchandise mart by a skyway across orleans street was last pegged at 754 in december down from 921 when the floatingrate loan was originated five years ago by goldman sachs gs according to kbra nationally office buildings sit roughly halfempty three years since the pandemic shutdowns of 2020 the borrower is a blackstone affiliate the blackstone real estate partners viii fund which reported a 16 return for the fund through the first quarter of 2023 globally blackstone manages 585 billion in real estate what you own matters and us traditional office represents less than 2 of our global portfolio today vs more than 60 in 2007 blackstone said about its exposure to the office sector we intentionally pivoted toward sectors like logistics and data centers which are benefitting from exceptionally strong macrotailwinds and supplydemand fundamentals a blackstone spokesperson said the transfer didnt signal the borrower was handing back the keys to the 1976 complex a concreteclad design of the chicagobased global architecture firm skidmore owings  merrill to its lender meanwhile the original 310 million loan is nonrecourse meaning the lender cant pursue any other of blackstone collateral to repay the debt related losing the trophy a 45 billion mortgage bill is coming due for some of americas signature commercial properties stocks were mostly lower on tuesday with the dow jones industrial average roughly unchanged the sp 500 index down 03 and the nasdaq composite index off 02 at last check blackstone shares were up 08 tuesday but are down some 21 over the past year this content was created by marketwatch which is operated by dow jones  co marketwatch is published independently from dow jones newswires and the wall street journal