COMMERCIAL REAL ESTATE DECEMBER 8, 2009

Push to Finish Tallest Tower

Seeking Jobs, Chicago Workers May Lend $170 Million to Restart 150-Story Building

CHICAGO -- The stalled construction of North America's tallest building, a 150-story luxury residential tower planned for downtown, may get a boost from unionized construction workers desperate for jobs.

Construction workers in Chicago are trying to put together their own stimulus package by helping to refinance and restart work on the Chicago Spire. The twisting, 2,000-foot, Calatrava-designed residential tower would be the tallest building in North America. WSJ's Joe Barrett joins the News Hub to preview his piece.

Any effort to save the Chicago Spire faces major hurdles, especially coming after a real-estate glut that flooded Chicago with new condos. Plans call for the 2,000-foot-high Spire to have nearly 1,200 units -- more than are expected to be completed for the entire downtown area in 2010. Prices start at $750,000, with the bulk of the condos costing $2 million to $15 million.

Workers broke ground with great fanfare in 2007, but the project stalled last year amid the financial crisis when funding dried up. That left many doubtful that the Santiago Calatrava-designed tower would ever emerge from the circular foundation that sits about a block from Lake Michigan.

Now a group of union pension funds is conducting due diligence on a plan to lend $170 million to Irish developer Shelbourne Development Group, said Tom Villanova, president of the Chicago and Cook County Building and Construction Trades Council, which represents 24 unions with some 100,000 members.
.........................
Mr. Villanova said the individual pension-fund directors, along with an AFL-CIO pension fund and a union life-insurance fund, are working on a loan package secured by the development site that could be announced in coming days.

Unions have been active investors in the Chicago construction market for years, with one AFL-CIO fund investing about $1 billion in the area. However, the Spire comes at a particularly risky time and on a scale all its own.

"It's about jobs for my members," Mr. Villanova said, adding that the project could mean 7.5 million man-hours of work over the next four to five years -- equivalent to roughly 900 full-time jobs for the hard-hit unions, some of which face unemployment as high as 30%.

Kim Metcalfe, spokeswoman for Garrett Kelleher, executive chairman of Shelbourne, said union financing would allow the developer to pay off its original land loan from Anglo Irish Bank and other creditors, and to resume work in January bringing water and electricity to the site.

She said the group is confident it can secure financing to complete the building, which she said would cost "significantly" less than $2 billion. "We are obviously in an extremely good position with more than 30% of the units sold and $194 million of [Mr. Kelleher's] personal money in the building," she said.

Shelbourne launched a sales push for the Spire in September 2007, when the high-end market was still doing well. Sales were brisk in the first four months, with a mix of U.S. and international buyers, Ms. Metcalfe said.

The showstopper was a two-floor penthouse of more than 10,000 square feet, with 360-degree views and an asking price of $40 million. It was snapped up by reclusive Beanie Baby magnate Ty Warner, she said.

After the project ground to a halt, Anglo Irish Bank, the original lender, nearly collapsed and was nationalized. Mr. Calatrava, the Spanish architect, said he was owed $11 million in fees. Bank of America Corp., one of the creditors, filed suit in U.S. District Court seeking $4.9 million, and Shelbourne countersued. The suits are pending.

The Spire got an unlikely break in early October with the demise of Chicago's hopes to host the 2016 Olympics. Mr. Villanova, who was on Chicago's Olympic bid committee, said the unions had committed to help fund the Olympic Village to house athletes. "When that went south on us, we started focusing on the Spire project," he said.

After cranking out an average of 4,500 new condo units a year downtown for the past four years, Chicago developers expect to complete 900 units next year and fewer than 100 in 2012, said Gail Lissner, vice president of Appraisal Research Counselors, a Chicago appraisal and consulting firm. "We don't see cranes in the sky anymore," Ms. Lisser said, which could mean the Spire would arrive in a much-changed market in four or five years.

The Spire got an unlikely break in early October with the demise of Chicago's hopes to host the 2016 Olympics. Mr. Villanova, who was on Chicago's Olympic bid committee, said the unions had committed to help fund the Olympic Village to house athletes. "When that went south on us, we started focusing on the Spire project," he said.

Stalled Chicago skyscraper project may start again
2009/12/09
By DON BABWIN (AP)

CHICAGO — Construction of what would be North America's tallest building may move forward thanks to unions that not only want their workers to build it but are trying to put together a deal to help pay for it.

A group of union pension funds — eager to provide work for union workers — are in talks to loan $170 million to Irish developer Shelbourne Development Group so construction of the twisting 2,000-foot-high Chicago Spire can resume as soon as early next year.

The Spire, which won city approval and saw workers break ground in 2007, has sat dormant for a year since the global financial crisis triggered various fights involving bankers, the architect and the developer, bringing work to a standstill.

The loan would pay off the estimated $64 million loan made by Anglo Irish Bank and satisfy various liens to firms that have worked on the Spire, including one by a firm associated with architect Santiago Calatrava, who stopped working on the project, claiming the developer owed him more than $11 million.

.....(cont'd)

Spire inches closer to reality
December 9, 2009
DAVID ROEDER

Developer secures backup financing for 150-story project, but he needs more

Garrett Kelleher, developer of the planned 150-story Chicago Spire, has acquired some financing, said his publicist. It's a start, but don't look for cranes right away at his property, 400 N. Lake Shore Drive.

Kim Metcalfe, spokeswoman for Kelleher, said the developer has gotten backup financing in the form of bridge loans and a mezzanine loan, which is similar to a second mortgage. She said the financing would kick in if Kelleher can secure about $170 million to restart the project, potentially the tallest building in North America. Metcalfe declined to provide any details of the financing.

Kelleher has been busy soliciting union pension funds as primary investors with the promise of putting their members to work. The investment, secured by title to the property, could come from the Union Labor Life Insurance Co. and two trusts of the AFL-CIO. I've heard these groups are skeptical, but Metcalfe and sources close to Kelleher insist they are in the final stages of a long review of the deal.

Working in Kelleher's favor, Metcalfe said, is the $194 million he has personally put into the project. Kelleher's Shelbourne Development Ltd. has reported about 30 percent of the building's 1,200 units have been sold, although it's getting little action lately. Metcalfe said the sales center is open by appointment only.

.....(cont'd)

Anglo Irish Bank would be repaid the money it advanced towards the construction of the Chicago Spire if talks between developer Garrett Kelleher and an American trade union over financing result in a deal.
The nationalised lender is reported to have advanced about €45m towards the project. The unions are doing due diligence on investing €115m in it.
The 2,000-foot tower is to have about 1,200 homes, about a third of which have been pre-sold, according to the developer.
Construction has been stalled for about a year and the unions have signalled they are willing to help finance the development to create jobs for their members.


there is more

Chicago Spire twists in wind as union funds pass on bailout loan
December 21, 2009
By: Eddie Baeb

Officials at four big investment funds affiliated with labor unions say they're not interested in rescuing the stalled Chicago Spire project.

Recent reports that Spire developer Garrett Kelleher and union officials are discussing a possible loan rekindled hope that work would resume on the twisting tower, which at 150 stories would be North America's tallest building.

But two union funds identified by a local labor leader and a Spire spokeswoman as having expressed interest, the AFL-CIO Building Investment Trust and the union-backed life insurer ULLICO Inc., are taking a pass, according to top executives there. Representatives of two others, the AFL-CIO Housing Investment Trust and the Multi-Employer Property Trust, say the Spire isn't a suitable investment for them.

.....(cont'd)

Dubai Has Tallest Tower; Chicago Has Hole
Jan 4, 2010
Reporting - Jay Levine

City's Spire Project Languishes, While UAE Celebrates Its Burj Khalifa

CHICAGO (CBS) ― It's now officially the world's tallest building. But while Dubai's Burj Khalifa, soaring half a mile high, towers over the United Arab Emirates, it was conceived right here in Chicago.

And the irony is that Chicago's own record-breaking effort – the Chicago Spire -- lies all but abandoned.

The Windy City built the first so-called skyscraper in 1885. The Home Insurance Building soared 138 feet tall. It's long gone now, demolished to make way for the LaSalle Bank Building.

.....(cont'd)

The Chicago Spire ??? Very little has been don to teh Spire for about a year now. We all now own a prime snow covered hole in the ground in Chicago dudes.

Feb 1 2008



Jan 4 2009



Thanks to Skyscrapercity for that one and the older one is on page 197 of that epic thread.

Santiago Calatrava will be meeting Brian Lenihan about his outstanding $11m wedge next tuesday according to the Galway Grapevine.

Kelleher firm's €149.6m loss linked to Chicago Spire project
February 3, 2010
COLM KEENA, Public Affairs Correspondent

A COMPANY in the Shelbourne Property Group owned by developer Garrett Kelleher has reported a pretax loss of €149.6 million after it made a provision for debts owed to it by other group companies.

A large part of the debt is linked to the stalled construction of the landmark Chicago Spire in the US, a €1 billion-plus project that was being part-funded by the now nationalised Anglo Irish Bank.

A spokeswoman for Mr Kelleher said he would not be commenting on the latest accounts for Clarinabbey Ltd, which show the company made the loss in the period to the end of March 2009.

The company’s accounts say its bank facilities are “technically in breach” as a result of the company not meeting certain loan to value and interest cover convenants and that it is in ongoing negotiations with its bankers to procure a standstill agreement.

.....(cont'd)

MINE THE GAP
Chicago Architectural Club: Chicago Prize

The Chicago Architectural Club is pleased to announce the 2010 Chicago Prize Competition: MINE THE GAP, a single-stage international design ideas competition dedicated to examining one of the most visible scars left after the collapse of the real estate market in Chicago: the massive hole along the Lake Michigan shore that was to have been—and may yet be—the foundation for a singular 150-story condominium tower designed by an internationally-renowned Spanish architect, a tower which was to have become a new icon for the city and region. What to do with the gap? Whether or not the project is resuscitated, what else can we do with this strategic and highly-charged site? Once the motor of real-estate speculation has stalled, what can we use to propel ourselves, and the discipline, forward?