A potential sale price has been revealed for the 100 East office building in downtown Milwaukee, which is in foreclosure.
According to a motion filed in Milwaukee County Circuit Court, the receiver for the office tower – Friedman Real Estate – has reached a sale agreement that would allow the building to be sold for $28.75 million.
The agreement comes as part of the foreclosure lawsuit that building owner Hertz Milwaukee 100 East – an affiliate of California-based Hertz Investment Group – has been working through with Wilmington Trust National Association – a trustee to the company’s lenders.
A court document lists the proposed buyer as 100 East Propco, LLC. State corporate records list only a Madison-based servicer as the registered agent for the LLC, but a source familiar with the deal says the interested buyer has connections to Klein Development.
According to various media reports, Klein is hoping to partner with restauranteur John "Johnny V" Vassallo to acquire the 36-story building and convert it into a luxury apartment complex.
Hertz purchased the 435,000-square-foot office building at 100 E. Wisconsin Ave. in 2016 for $78 million, according to state records. The acquisition was part of a $416.9 million office portfolio deal for Hertz.
That same year, law firm Michael Best & Friedrich announced it would move its 235 employees out of 100 East into the BMO Tower at 790 N. Water St. The move took place in April 2020. Also in 2016, PricewaterhouseCoopers announced it was moving more than 250 workers from 100 East to the 833 East office building. The move took place in December of 2020.
Morningstar Credit Ratings LLC, a national credit rating organization, in 2018 placed a $51.9 million loan for the 100 East building on its watchlist because of the expected drop in occupancy from 83% to 60.4%.
Since then, 100 East has lost other tenants to new downtown office buildings, including Fiduciary Management, which currently leases space on the 22nd floor of the building, but is in the process of moving into new digs at BMO Tower.
As of March 28, 2022, Hertz owned Wilmington Trust close to $50.8 million, according to a court document, plus continuing interest, costs, and fees, including attorneys fees.
The proposed sale agreement comes about a year after CBRE started marketing the building to potential buyers. Those efforts, according to the court filing, included an initial call for offers that resulted in eight potential buyers. A second-round call later reduced the number of potential buyers to three. Those three parties then submitted their “highest and best” purchase proposals.
But just because a sale agreement has been reached, doesn’t mean it’s final. According to the motion, the agreement is not only subject to the approval of the court, but also to any “higher or better bids” that may come in for the property.
An April 12 hearing has been called to discuss and potentially approve the sale agreement.
If the sale agreement is approved it will exclude any rights the receiver might have to any property tax refund Hertz might receive from the 2022 property assessment challenge it recently filed against the city.
Hertz argues in the complaint that 100 East’s 2022 assessment should only be roughly $32.4 million – about half of the city’s assessment of $60.2 million for the property.
Having already paid just over $1.43 million in property taxes to the city and other taxing bodies based on the $60.2 million assessment, Hertz claims it should be refunded $661,118.