Rubenstein in trouble on $85M loan for Continental Towers

Rubenstein Partners’ $85 million loan on a trio of suburban office towers has been moved to special servicing, months after a major tenant opted not to renew its lease.

Special servicer Rialto Capital and Wells Fargo have been closing in on Continental Towers, which spans almost a million square feet across three 12-story buildings at 1701 West Golf Road in Rolling Meadows. The loan was placed on the lender’s watchlist in February, according to information from credit ratings agency DBRS Morningstar.

The landlord has struggled to lease the property since the pandemic, losing “a number of large tenants either prior to lease expiration or just at.” The departures have left the complex about 64 percent occupied, according to a report Wells Fargo made to Morningstar earlier this year.

Rubenstein isn’t alone — Chicago’s office market hit record-high vacancy this year as landlords contended with remote work and a tough economy. A venture led by Chicago investor Chet Balder recently said it would turn over the keys to a 256,000-square-foot office building located on the same Rolling Meadows street after losing one of its biggest tenants, Crain’s reported.

Tech giant Panasonic, which had occupied about 47,000 square feet at Continental Towers, opted not to renew its lease when it expired in December, per a report Wells Fargo made to Morningstar. Only a small fraction of that hit was defrayed when a smaller tenant, manufacturer Rational, opted to extend its 8,000-square-foot lease through 2026. Panasonic did not respond to a request for comment.

Rubenstein, a private equity firm based in Philadelphia founded and helmed by David Rubenstein, has asked for a loan modification. Discussions with Rialto are ongoing, according to the special servicer’s report from last month.

The details of the modification or extension Rubenstein is asking for weren’t disclosed, and the firm didn’t return a request for comment. Rialto and Wells Fargo did not return requests for comment.

Rubenstein paid about $125 million for the complex in 2018, according to past news reports. 

Despite its troubles, the firm has indicated that it still has faith in suburban office properties. A Rubenstein affiliate acquired a portion of the mezzanine debt on Workspace Property Trust’s $1.1 billion acquisition of a national, 53-property suburban office portfolio, the Philadelphia firm announced in February.

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