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