One & Two Prudential Plaza Receives Hope Note Modification

The Chicago office towers One & Two Prudential Plaza have received a hope note modification made possible by a $75 million new equity investment.

Mark Karasick and Michael Silberberg provided the new equity contribution which according to a Barclays report “will be senior to the B note and earn a preferred return” on the loan.

The $410 million loan splits between JPMCC 2006-LDP7 $336 million A note and JPMCC 2006-CB16 $74 million B note.

The modification is in line with analysts’ expectations based on the property appraisal results in March which implied a 20% discount that indicated an A/B loan split modification of the $410 million LDP7/CB16 “should leave the A note at about 105 LTV.”

The A/B split enables borrowers “to take out two one-year extensions conditional on partial principle pay downs,” analysts note, potentially pushing maturity to June 2018.

The terms of the modification also include a short-term interest rate reduction on the A note that will accrue following undisclosed details, which, analysts warn, due to the hope note “will push up interest shortfalls on the trusts.”