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Magellan Development Group to own 90% of the Vista Tower, Chicago’s Third-Tallest Skyscraper

Chicago’s third-tallest skyscraper may not have anyone living there just yet, but a stake in the tower has already been sold off. Chicago-based Magellan Development Group already owned 10% of the Vista Tower and has reached a deal to buy the remaining 90%. A deal was confirmed with the Chinese developer Wanda Hotel Development to purchase the Chinese company’s stake for $270 million.

The 1,191 foot tower has been under construction for just over 4 years, and residents were originally expected to start moving in at the end of this year. This move doesn’t look to disrupt any plans for the Vista Tower, although it remains unclear who will operate the hotel, which Wanda had originally planned to do.

 

Breaking Ground

The total building costs for this skyscraper will come out at a cost of around $1billion, which includes debt. The tower gained attention not only for its height but for the record-breaking loan which the developers secured in 2017. Originally, construction started on the site prior to the $700 million loans being approved, indicating the confidence developers had in the project.

The tower which will sit along the Chicago River will feature 396 condos as well as a hotel. Of the condos available in the Vista Tower, just over half have contracts to buy, according to a statement made by David Carlins, CEO of Magellan in May. Originally, September was being looked at as the date for residents to move in. But with everything that happened so far this year, this looks to have been set back.

There are no concerns from the group about selling the remaining half, despite slower sales in the city. Indeed the threats of both the events of 2020 and the legalization of marijuana look to impact the real estate market here. Last month we looked into the threats of both CoVid and Marijuana, and how real estate could be affected. Whether or not this impacts the Vista Tower remains to be seen.

 

Chicago’s Skyline

Whilst it will not be the tallest in the city, the Vista Tower looks amazing and will certainly become a key landmark in Chicago. This skyscraper will be 3rd tallest behind the Willis Tower (1,451 feet tall) and Trump International Hotel & Tower (1,389 feet). The tower was designed by Jeanne-Gang and it will become the tallest structure in the world designed by a female.

The structure itself consists of 3 interconnected towers, which vary in height. This tower looks set to offer some of the best views of the city, even better than Cité restaurant at the top of Lake Point Tower. We reported earlier this month that Cité is now for sale, another chance to own real estate which features some of the city’s most famous and bellowed skyline.

 

Wanda’s Movements 

Wanda Hotel Development is part of the Dalian Wanda Group, the company owned by billionaire Wang Jianlin. The group however were added to a Chinese watch list in 2017 following some highly leveraged acquisitions around the world. This was part of the Chinese government’s commitment to crack down on debt in the private sector which may harm China’s a financial system. So the hypothesis is that the Chinese group was forced to sell – or at least highly encouraged to do so.

China’s richest man Jianlin has been heavily dumping assets in order to pay debt obligations, and the sale of the Vista Tower is yet another example of this. Jianlin’s net worth has plunged by 37% and sits currently at just over $20 billion. The group still has to unload a further 24% of its total assets, and we can expect to see more sales of this nature.

Originally the group was trying to sell their stake in the Vista Tower to Canadian group ‘Triple Five’ which commonly invests in large scale projects. No sale came from these talks but after Magellan changed ownership in October 2019, they stepped up interest in the stake.

In that move, both CEOs Joel Carlins and Jim Loewenberg moved aside to become advisors and chairmen emeritus.  During the negotiations, 50% of Magellan was sold off to BLG Capital Advisors and New York-based Winter Properties, a real estate investment business.

 

Announcement

There was no razzmatazz or great announcement made when this deal was completed. The deal was confirmed by CEO David Carlins, which had previously been disclosed in a stock exchange securities filing in Hong Kong. There has been no comment from the Wanda Group at all, nor has there been an official statement from Magellan. The deal was reached and signed on July 24th and it was Bloomberg who first broke news of the sale. The deal will be concluded on Oct 22nd, just before expected residents begin to move in at the Vista Tower.

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