This high-rise tower had all the makings of success. Then things got
When developers hosted a ceremonial groundbreaking in September 2016 for Vista Tower, a high-rise condo building that is now nearing completion on East Wacker Drive, the team included Dalian Wanda, a giant Chinese investment firm that planned to open its first U.S. hotel in the behemoth. The downtown condo market was heating up. And architect Jeanne Gang’s design of the undulating 93-story tower showed an uninterrupted expanse of glass in several shades of green sheathing it.
Four years later, Dalian Wanda is out, and it appears its high-profile hotel might be as well. Just half of Vista’s condos have sold. There’s a vast unsold inventory of downtown condos thanks to 2020’s twin crises of pandemic and civil unrest. And the almost-complete tower has a black gash across its 83rd floor, left open as a “blow-through” to prevent winds from making high floors wobble.
What’s more, the original plan to sell some of the tower’s roughly 400 condos to Chinese buyers evaporated after the Chinese government started restricting outbound currency in 2016. This month, as developer Magellan Development Group closes in on delivering the units, two buyers of multimillion-dollar condos sued to break their contracts.
The developers have a $700 million construction loan, one of the biggest ever in Chicago. To pay it off, they have to sell condos. At half sold, are they headed for trouble, as Donald Trump was when he couldn’t pay off the $640 million debt on his Chicago project when it came due? Not yet, says Dave Hendrickson, a senior managing director in Chicago for Walker, a commercial real estate lender based in Bethesda, Md. He says for loans on projects of Vista’s scale, “it’s typical to have a long runway. I think they’d have a few years after completion to pay it all down.”
The borrower pays down the loan incrementally, as unit sales progress, Hendrickson says, and by around 50 percent sold, “they may have paid off the loan.” He has not been involved in the financing of Vista but says that “it doesn’t seem out of whack to me.”
Rob Pontarelli, Magellan’s senior vice president of marketing, says the firm will not disclose details of the construction loan or its due date.
“Development is a long game, and we knew there would be challenges,” Magellan CEO David Carlins says in an interview, “but I don’t think we wrote down ‘global pandemic’ when we listed the things we might encounter.”
‘LESS THAN WE HOPED’
With the first deliveries of finished condos slated for the latter two months of the year, Carlins confirms Crain’s estimate that Vista Tower is about half sold, “less than we hoped.”
Sales, Carlins says, have slowed this year for three reasons, one of them specific to Vista Tower. The first two are weakness in the downtown market and that buyers are often reluctant to put down their money in the last stretch of construction, preferring to wait until they can check out the look and feel of the finished construction.
The third reason, according to Carlins, is uncertainty that has wafted around the project since November 2017, when reports first surfaced that Dalian Wanda, which had a 90 percent stake in Vista Tower and planned to open its first U.S. hotel there, was pulling out of many of its projects outside China. The uncertainty congealed into worry after Crain’s Alby Gallun reported in August that Magellan is buying out Dalian Wanda.
“The first thing anyone asks about Vista is, ‘What’s up with the hotel?’ ” says Phil Skowron, an @properties agent…