Credit woes sink Mag Mile deal

Crain's Chicago Business Reports:

The deepening credit crunch is forcing a high-flying New York real estate investment firm to walk away from a hefty $200-million contract to buy a Michigan Avenue office skyscraper — and $10 million in earnest money.

Broadway Real Estate Partners LLC's failure to close the deal for the Equitable Building, 401 N. Michigan Ave., is the first high-profile Chicago case of a buyer risking such a large, non-refundable deposit because of the capital markets' persistent woes. This summer, the firm's $335-million, highly leveraged deal to buy 500 W. Monroe St. was nearly sidetracked. This time, Broadway wasn't so lucky.

"If somebody uses high leverage, if that's their M.O. to generate the returns, those days are done," says Alasdair Cripps, a senior managing director with Chicago-based Mesirow Financial, which is starting its own fund targeting industrial and apartment properties.