The collateral behind the $235 million 540 West Madison Street loan could see occupancy dip to 54% by year-end. Bank of America has now given up a second large chunk of space in the Chicago office building.
The move by Bank of America was not entirely unexpected. In the original offering docs, footnotes surrounding the loan indicated that BOA had the right to relinquish big amounts of space.
At loan origination, Bank of America had 757,317 square feet (almost 69%) in the 1.1 million square foot tower. BOA gave back 166,522 square feet at the end of 2013. In June, servicer notes indicated that BOA had turned back another 266,000 square feet. This move prompted the servicer to note that occupancy would be 54% by year-end if the space was not re-leased. There is a $30 million TI/LC holdback in place to cover the transition to new tenants.
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