Loews Hotels & Resorts Breaks Ground on 400-room Hotel

By Gabriel Circiog, Associate Editor

Loews Hotels & Resorts recently held a groundbreaking ceremony on the site where it will open the Loews Chicago Hotel in 2015. Company officials, including Chairman Jonathan M. Tisch and President and CEO Paul Whetsell, were joined by Donald R. Wilson, Jr.— founder and CEO of DRW Trading Group—and Mayor of Chicago Rahm Emanuel at the ceremony.

“Even with Chicago’s hotel occupancy at a record high last year, companies continue to build more hotel stock as more and more tourists, business travelers and conventions are flocking to Chicago,” said Mayor Emanuel. “I am pleased to see this hotel rise from the ground, creating hundreds of jobs and setting up Chicago to continue its growth as one of the premiere destinations in the entire United States.”

Designed by the architectural firm Solomon Cordwell Buenz and developed by DRW, the Loews Chicago Hotel will be part of a 52-story tower that will also include 398 luxury residential apartments. The hotel will feature 400 guestrooms, including 36 suites. The new construction will also include a signature restaurant, over 25,000 square feet of meeting space, outdoor terraces, an outdoor rooftop including a swimming pool, and a spa/fitness center.

Donald R. Wilson, Jr. said: “We are excited to partner with Loews in designing and delivering a hotel and residential product. The apartment and hotel combination will be a benefit to one another, offering amenities to residents that set us apart from the current market.”

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Photo Courtesy of: Loews Hotels & Resorts via Facebook.

BEMT Invests in 24-Story Mixed-Use Luxury Rental Community

By Gabriel Circiog, Associate Editor

Bluerock Enhanced Multifamily Trust has recently announced its investment in MDA City Apartments, a mixed-use luxury rental community in downtown Chicago. The New York-based non-traded real estate investment trust has partnered with Village Green, the owner of the 24-story building. Village Green is an owner/operator with a portfolio of around 40,000 units in 13 states.

“MDA presented a unique, off-market opportunity to purchase an interest in a stable, well-occupied, core urban infill project in a primary market with a top partner,” said James Babb, Bluerock senior managing director and chief investment officer. “By recapitalizing and streamlining what had been a fairly complex capital structure, we were able to seize on a valuable opportunity at below-market cost.”

MDA City Apartments features 190 residential dwellings and 8,238 square feet of storefront retail space. The property was completed by designer Daniel Burnham Jr. in 1927 and underwent a major $45 million conversion in 2006. The historic Medical and Dental Arts Building was transformed into a Class A, LEED-certified mixed-use development.

Residents at MDA City Aparments have access to various amenities including a rooftop Sky Club, 24/7 concierge, business/conference center, fitness facility and free wireless internet in the common areas.

The property’s downtown Chicago submarket has seen vacancy rates fall since 2008 and, based on research from REIS, the rates are forecast to remain at the current level of 5 percent for the near-to-mid-term. Additionally, another important factor in BEMT’s decision to invest in MDA City Apartments was the submarket’s effective rents, which have been growing since 2010.

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Photo Courtesy of: www.villagegreen.com

Duke Realty Corporation Expands Portfolio in Chicago with Purchase of 288,000 SF Industrial Building

By Gabriel Circiog, Associate Editor

Duke Realty Corporation recently announced the acquisition of 335 W. Crossroads—a 288,000-square-foot industrial building in the I-55 submarket, which is Chicago’s second-largest industrial market. The real estate investment trust, which specializes in the ownership, management and development of bulk industrial facilities, also announced it has leased 190,080 square feet in the building to RTC Industries.

Located in Crossroads Business Park, the Class A industrial property increases Duke Realty’s industrial portfolio in the business park, where the REIT already owns 3.3 million square feet of industrial space in 10 fully leased buildings. The acquisition increases Duke Realty’s overall Chicago-area portfolio to over 10.6 million square feet and helps the REIT to meet the expansion needs of RTC, which also leases the 503,200-square-foot Crossroads V building.

“RTC has been an excellent tenant with solid growth since becoming a Duke Realty tenant,” said Steve Schnur, senior vice president of Duke Realty’s Chicago operations. “The acquisition of 335 W. Crossroads allows us to provide RTC with the additional space it needs and complements our strategy of increasing our investment in quality industrial buildings in strong distribution markets.”

The seller of 35 W. Crossroads Parkway was represented by Jeff Kapcheck with Colliers International. Bill Frain, Todd Lippmann and Jim Whalen with CBRE represented RTC Industries in their lease.

According to a recent report released by CBRE Global Research and Consulting, net absorption in the Chicago industrial market has increased to 16.9 million square feet compared to 2.4 million in 2010 and 15.7 million in 2011.

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Photo Courtesy of: www.dukerealty.com

Chart Courtesy of: CBRE Global Research and Consulting

ST Residential LLC Puts 326-unit Lex up for Sale

By Gabriel Circiog, Associate Editor

Chicago-based ST Residential LLC has hired brokers Holliday Fenoglio Fowler and Eastdil Secured to manage the sale of a 13-property portfolio with an estimated value of close to $1 billion. The multifamily properties, which were part of the failed Corus Bank condominium portfolio acquired by the venture, are located in Atlanta, Chicago, Houston, Las Vegas, Los Angeles, Phoenix, Stamford and Tampa.

ChicagoRealEstateDaily.com reports that the portfolio includes the Lex—a 326-unit condo-turned-apartment tower located in the South Loop at 2138 S. Indiana St. The 35-story tower was built by Chieftain Group Ltd., and by the time the project was completed in 2009, the condo boom had ended—leaving the developer with dozens of unsold units.

Chieftain was unable to pay off a construction loan to Corus Bank and relinquished the property to ST Residential LLC in 2011, which converted the high-rise to apartments. According to a report by Chicago-based consulting firm Appraisal Research Counselors quoted by the same source, the Lex was 75 percent leased at the end of the third quarter. ST Residential is a manager of properties owned by a public-private partnership between the FDIC and a group of leading U.S. private real estate investors.

Barry Sternlicht, chairman and CEO of Starwood Capital Group and chairman of ST Residential, said: “The Corus Bank transaction has performed extremely well for the FDIC and our private investor group. The partnership has repaid $1.3 billion of FDIC purchase money notes and has more than $1 billion of cash in hand. More than 32 loans were paid off at par, and we have sold 60 percent of the condo inventory we acquired at ever-escalating prices.”

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Photo Courtesy of: www.stresidential.com

Construction Begins on 45-Story West Loop Office Tower

By Veronica Grecu, Associate Editor

Chicago’s largest commercial real estate project in five years kicked off on January 15 in a $400 million joint venture between Canada-based Ivanhoé Cambridge—the real estate arm of Quebec pension fund manager Caisse de dépôt et placement du Québec, developer Hines of Houston and local business leader Larry Levy. An earlier report on the story by PERE News revealed that the Canadian real estate investment company secured 75 percent of the capital, while Hines covered the remaining $100 million.

The 45-story River Point tower is under development at 444 West Lake Street in the West Loop, Chicago’s financial district, on a parcel owned by Larry Levy. Designed by prominent architectural firm Pickard Chilton, the Class A office tower will include 900,000 square feet of leasable office space ready for delivery in 2016. According to a press release from Ivanhoé Cambridge, the building is pre-certified LEED Gold by the U.S. Green Building Council.

Additionally, the project includes a 1.5-acre public park that will be developed on top of the existing rail infrastructure to encourage pedestrian activity along the Chicago River.

“River Point will be a striking addition to Chicago’s skyline and the first in a new generation of office buildings.  There is significant interest from major corporate tenants,” said C. Kevin Shannahan, CEO of Hines’ Midwest and Southeast regions, at the groundbreaking ceremony.

According to Mayor Rahm Emanuel’s press office, the project will create around 1,000 construction jobs and house 3,400 permanent office jobs.

Two days after groundbreaking, River Point landed an anchor tenant, Crain’s Chicago Business reports. While developer Hine is still on the hunt for tenants, law firm McDermott Will & Emery LLP—the fifth-largest firm in Chicago—signed a letter of intent to lease 225,000 square feet of space in the tower. If the deal is closed, McDermott is expected to relocate its offices at 227 West Monroe St. in 2017, when its current lease expires.

Renderings of River Point via Pickard Chilton Architecture

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Closed Hotel to be Reintroduced to Market as Le Meridien Chicago at Oak Brook

By Veronica Grecu, Associate Editor

A shuttered Renaissance-branded hotel next to the Oakbrook Center mall in Chicago’s Oak Brook suburb will reopen in early 2014 under the Le Meridien banner. The announcement was made last week by Starwood Hotels & Resorts Worldwide Inc., who teamed up with real estate investment firm RockBridge Partners of Columbus, Ohio to transform the closed facility into an upscale hotel for both business and leisure travelers.

The 10-story Renaissance Hotel building (pictured) located at 2100 Spring Rd. was sold by General Growth Properties Inc. to RockBridge Partners for an undisclosed amount in October 2012. The property is undergoing a complex $20 million renovation that will culminate with a grand opening ceremony in January 2014.

“The comprehensive renovation and re-branding of the hotel, coupled with the strength of the Starwood system, will position Le Meridien Chicago–Oakbrook Center as the premier hotel in the market,” said Jim Merkel, president and CEO of RockBridge, as quoted in a press release by Starwood Hotels.

The hotel’s 172 guest rooms and suites will be completely refurbished and feature the signature Le Meridien Bed designed by artist Nick Dine, who is one of the members listed in Le Meridien’s “LM 100” list of design experts and consultants. A proprietary new bar and restaurant with meeting spaces will be created on the building’s ninth floor, and guests will have access to a state-of-the art fitness center and rooftop terrace.

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Image of former Renaissance Hotel via hotelsharbor.com

Transwestern Brokers Sale of Oak Creek Center Office Portfolio

By Gabriel Circiog, Associate Editor

Transwestern’s Chicago office recently announced that it has brokered, on behalf of KBS Realty Advisors, the sale of the Oak Creek Center office portfolio in Lombard, Ill. A joint venture between Investcorp and Golub acquired the 427,161-square-foot office portfolio for $39.5 million.

“Investors are beginning to recognize the value in stable, suburban-Chicago, Class B office investments,” said Gary Nussbaum, managing director of Transwestern. “This type of property can generate healthy levered returns in the current low interest rate environment. The sale of Oak Creek Center to a New York-based advisor of Middle Eastern capital marks the third time in 2012 that a significant suburban Chicago office property traded to foreign investor interests. We expect this trend to continue.”

Located in suburban Chicago’s East-West Corridor, the institutional-quality 11-building portfolio features nine single-story and two multi-story buildings in a business park setting. At the time of sale, the portfolio was 87.5 percent leased. Transwestern’s Managing Directors Gary Nussbaum and Thomas Gorman, as well as Senior Associate David Matheis, represented KBS Realty Advisors. The buyer represented itself in the transaction.

In other local real estate news, DuPont Fabros Technology Inc. announced that the company’s CH1 data center in Elk Grove Village, Ill. is now fully leased. Built in two phases, CH1 totals 485,000 square feet, 231,000 raised square feet and 36.4 megawatts of critical load.

An existing financial tenant in the company’s New Jersey facility has leased 0.43 MW in Phase I, and an existing tenant from the company’s Northern Virginia facilities has leased 2.6 MW in Phase II. The two deals take the total number of tenants in CH1 to nine with a weighted average lease term of 9.9 years.

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Photo Courtesy of: www.oakcreekcenter.com

Capital One Set to Open New Office Space in Chicago’s Loop

By Gabriel Circiog, Associate Editor

Capital One Financial Corporation is set to open a new office space in the Chicago’s central business district, known as “the Loop.” The announcement comes from the company and Mayor Rahm Emanuel. Capital One will sublease around 65,000 square feet of office space in the building—owned by State Teachers Retirement System of Ohio and located at 77 West Wacker Dr.

The new office, in the former headquarters of United Airlines, will house the company’s U.S. Card business and accommodate around 350 associates. Capital One expects to move into the space in the fourth quarter of 2013. With this move, Chicago will become a primary hub for the company’s U.S. Card business and supporting staff functions, alongside McLean and Richmond, Va.

“Capital One’s decision to locate its U.S. Card business in Chicago is a testament to the vibrancy, talent and quality that our downtown has to offer,” said Chicago Mayor Rahm Emanuel. “We look forward to a great partnership with Capital One and the tremendous value they will bring to our local community, as the company creates jobs now and in the future.”

Capital One expects to grow its presence in the Chicagoland area over the next 24 months as the company moves from existing to new locations, including the Rolling Meadows Atrium Corporate Center. The company currently has around 1,000 associates in the area, and the majority of associates at the downtown location will relocate from sites across the Chicago suburbs.

Ian Cunningham, managing vice president of Capital One U.S. Card, said since the company acquired HSBC U.S. credit card business in May, they have been working hard to outline the best footprint for their business and found Illinois best understood and appreciated the importance of a strong financial services industry.

“Chicago is a dynamic city, and the space downtown is a perfect fit for our needs,” said Cunningham. “It is a great location that provides us with access to all the resources that the city has to offer—transportation and an experienced and incredibly talented workforce.”

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Photo Courtesy of: www.77westwackerdrive.info

Health Care REIT Expands Portfolio

By Gabriel Circiog, Associate Editor

Ohio-based Health Care REIT Inc. has acquired a 192-unit senior housing development in Lake Barrington for $81.7 million from a joint venture between Senior Lifestyle Corp. and Walton Street Capital LLC, ChicagoRealEstateDaily.com reports. The complex is one of 19 properties that Health Care REIT acquired in a recent $459 million sale/leaseback deal with Chicago-based Senior Lifestyle. Chicago-based private equity firm Walton Street was Senior Lifestyle’s partner in seven of the 19 properties sold to Health Care REIT.

Located at 22320 Classic Court, Lake Barrington Woods offers both independent and assisted living services to senior citizens. The complex is 96 percent leased and will continue to be operated like all the properties sold to Health Care REIT—by Senior Lifestyle. The development features private studio, one- and two-bedroom apartments. Amenities include a beauty and barber shop, personalized care plans with 24-hour staffing, an emergency response system and housekeeping and maintenance services.

Health Care REIT earlier this year acquired another two senior housing projects in the city. The real estate investment trust also increased its market share in the senior housing sector with the recent purchase of Sunrise Senior Living Inc. and its portfolio, which includes 125 properties. The Sunrise Senior Living Inc. portfolio is now valued at $3.2 billion.

Jeff Theiler, an analyst at Green Street Advisors Inc.—a Newport Beach, Calif.-based research firm, told the same source that the health care sector has seen a trend of consolidation of ownership, as the three major REITs—Health Care REIT, Ventas Inc. and HCP Inc.—have a major advantage compared to other investors in the market.

The REITs require much lower returns on investment than competitors, such as private-equity firms, and are able to afford to pay more per purchase. This is mainly due to the low interest rates and the ability to sell stock at premiums over the value of the assets underneath.

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Image Courtesy of: www.seniorlifestyle.com

Retail Properties of America Inc. Sells Aon Hewitt Property; Walgreens Opens Store in Restored Noel State Bank Building

By Gabriel Circiog, Associate Editor

Retail Properties of America Inc. has announced the sale of the Aon Hewitt Property. Located in Lincolnshire, Ill. at 4 Overlook Point, the 818,686-square-foot office property is fully leased to Aon Corporation. The six-story office building is situated around 31 miles north of Chicago and was sold for $148 million to an undisclosed buyer.

The proceeds from the sale were utilized to repay $117.7 million of mortgage debt and accrued interest encumbering the whole Aon Hewitt Campus. The shopping center real estate investment trust continues to own the remaining 343,000-square-foot Aon Hewitt East Campus, which is fully leased to Aon Hewitt.

“The culmination of the Aon Corporation lease extension and the subsequent sale of this property over the past four months highlights our active approach to asset management and our continued ability to achieve our stated strategic initiatives that we set out earlier in the year,” stated Shane Garrison, chief operating officer and chief investment officer of RPAI. “We are pleased with the team’s progress toward meeting our target of $450 to $550 million of asset sales by the end of 2012.”

So far this year, Retail Properties of America Inc. has sold $414.4 million of non-core and non-strategic assets. Since October 1, the company has completed $185.5 million of dispositions, encompassing 1.2 million square feet and including the Aon Hewitt Property and four single-tenant retail properties. All 2012 debt maturities have been addressed in the process.

In other local real estate news, Walgreens has opened its second store in Chicago. The national drugstore chain has collaborated with the city’s Commission on Chicago Landmarks on the restoration of the Noel State Bank Building. Constructed in 1919 and designed by Gardner C. Coughlen in a neo-classical style, the building has been home to numerous banks over the years—the last being Midwest Bank which closed several years ago.

The new Walgreens store, located at the northwest corner of North and Damen avenues in Chicago’s Bucktown/Wicker Park neighborhood, has preserved the historic building’s original architectural integrity.

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