Cupkovic said the firms plan to add amenities to the building and build out suites on vacant floors ranging in size from 1,000 to 5,000 square feet for smaller office users. R2 is an equity partner in the plan, though Cupkovic did not say how much capital the owners plan to put into the property.
The building "has so much history," Cupkovic said. "It just needs a little love."
Art gallery tenants are located in the building's lower-floor retail space, while satire publication the Onion occupies more than 11,000 square feet on the top floor, according to Cupkovic.
A spokesman for Feil declined to comment, and a spokesman for Beltway did not respond to a request for comment.
R2 is among a handful of investors looking to capitalize on downtown office buildings being sold at steep discounts to their pre-pandemic values. The firm, which is perhaps best known for owning a series of properties on and near Goose Island, partnered with another lender last year on a plan to revitalize the distressed Chicago Board of Trade Building in the heart of the Loop. More recently, an R2-led entity paid $60 million for the 41-story office building at 150 N. Michigan Ave., about half of what the tower traded for in 2017.
Beltway also appears to have an appetite for distressed Chicago office properties. Separate from the Franklin Street deal, the firm recently bought a troubled $42 million loan tied to a portfolio of three West Loop loft office buildings at 130 S. Jefferson St., 641 W. Lake St. and 901 W. Jackson Blvd. R2 manages all three of those properties.
For Feil, losing the Franklin Street building doesn't eliminate its local office property headache. The firm has a much bigger problem it is trying to solve on LaSalle Street, where it has a $105 million mortgage tied to the building at 10 S. LaSalle St. that is due to mature in early 2026.
That loan, which was packaged with other mortgages and sold off to commercial mortgage-backed securities investors, was transferred to a special servicer in 2022 — typically a red flag that the borrower is in danger of defaulting. The building's second-largest tenant, Northern Trust, vacated roughly 100,000 square feet in the 781,000-square-foot building at the end of 2021.
Feil notched a win last year when Charlotte, N.C.-based specialty insurance company Amwins inked an expansion and extension of its lease at the property. But a sharp blow is coming from the building's largest tenant, Chicago Title Insurance, which is poised to leave behind nearly 106,000 square feet next year for a smaller space at 35 W. Wacker Drive.
The Real Deal Chicago first reported that Beltway had taken control of 730 N. Franklin St.
