The owner of the 100 East office tower in downtown Milwaukee has filed a lawsuit against the City of Milwaukee, claiming that its 2022 assessment of the building is more than double what the struggling office tower is actually worth.
In a complaint filed in Milwaukee County Circuit Court, Hertz Milwaukee 100 East – an affiliate of Woodland Hills, California-based Hertz Investment Group – claims that the fair market value of the 435,629-square-foot, 37-story office building at 100 E. Wisconsin Ave. is no more than $35.2 million, and that its 2022 property assessment should’ve been roughly $32.4 million.
That’s 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.
In the four-page complaint, Don M. Millis, an attorney and shareholder at Madison-based Reinhart Boerner Van Deuren, states only that the city’s assessment is “excessive” when “compared with other commercial property in the city.”
A call made to the Milwaukee City Attorney’s office was not immediately returned on Monday afternoon.
The challenge comes as Hertz continues work through the foreclosure of mortgage lawsuit filed against the company in August 2021
by Wilmington Trust National Association – a trustee to the company’s lenders.
That lawsuit came about a year after 100 East lost what would be the first of several tenants that moved to newer office buildings.
Hertz acquired the building 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%. The drop in occupancy was due to the Michael Best relocation.
Since then, 100 East has lost other tenants to new 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.
The building was around 55% occupied in August 2021, according to industry data sources. That figure should be much lower now, given the pending exits of other tenants.
Failure of building owners to retain tenants, has left real estate brokers speculating about the future of the building
, and if there might be some interest in in redeveloping the 34-year-old building that was assessed at more than $73.7 million, just three years ago.
According to online court records, the parties in the foreclosure case are slated to reappear in court in April to discuss a possible sale of the building.