Add $45 million Buffalo Grove deal to Florida investor’s office spree

April 9, 2014

post17A Florida buyer is set to pay about $45 million for a 12-story Buffalo Grove office tower, continuing an aggressive initial push into the Chicago area.

Beacon Investment Properties LLC, which hadn’t invested in Chicago until late 2013, plans to buy Riverwalk II, a 258,955-squarefoot building at 2100 E. Lake Cook Road in the northwest suburb, for about $174 per square foot, according to sources.

It’s the fourth local office deal in a little over five months for Beacon, a real estate fund manager. Beacon has committed about $234 million to four Chicago-area office buildings since Oct. 30, when it finalized its first deal in Naperville.

That $24 million acquisition in the western suburb, for the four-story building at 215 Shuman Blvd., was followed with the $63.8 million acquisition in December of the 36-story tower at 20 N. Clark St. in the Loop.

In another deal yet to be completed, Hallandale Beach, Fla.-based Beacon will pay about $100 million for the 23-story tower at 200 W. Monroe St. in the Loop, according to sources.

“Beacon would not, in my opinion, be buying Riverwalk if they didn’t already have the other buildings here,” said Tony Smaniotto, who leads the investment sales team in the Chicago office of Seattle-based Colliers International.

CRITICAL MASS

“Once a buyer has a comfort with a market, they want to build a critical mass,” said Mr. Smaniotto, who was not involved in the deal. “You don’t want to fly from Florida to Chicago to see your one building in the suburbs. You can grow a staff here, maybe add an acquisitions guy, and be able to see more deals. After your first deal closes, opportunities (for more acquisitions) come to you.”

A spokesman for Beacon, whose clients include investors from South America, declined to comment.

Beacon is one of several relative newcomers to office investments in the Chicago area, many of which have branched out because of frothier pricing in cities such as New York and San Francisco. Focusing on a higher potential return than on the coasts, Beacon’s co-founder and managing member, Ariel Bentata, previously said it expected extensive growth in the Midwest.

The Buffalo Grove tower, completed in 1998 as a build-to-suit for Allstate Corp., is being sold by a venture of Itasca-based Hamilton Partners Inc., which developed the building and a twin tower, which is not part of the sale. Hamilton sold an undisclosed stake in Riverwalk II to a fund of Hinsdale-based JSQ Commercial LLC for $9.4 million in 2012, a recapitalization that allowed it to refinance the tower with a $23.5 million loan.

Mark Hamilton, a partner at Hamilton, declined to comment. JSQ CEO Thomas Murphy did not return a call requesting comment.

Jim Postweiler, a managing director at Chicago-based Jones Lang LaSalle Inc. who brokered the sale, also declined to comment.

LOW VACANCY

The relatively high price per square foot reflects the 4 percent vacancy in the tower, compared with 24.4 percent overall vacancy in Chicago’s suburbs at the end of the first quarter, according to JLL.

Woonsocket, R.I.-based drugstore chain and pharmacy benefits manager CVS Caremark Corp. leases more than 140,000 square feet through October 2021,  according to listing materials from JLL. That deal and other leases, including the headquarters of PrimeSource Healthcare Systems Inc., which provides onsite care at nursing homes, leave more than eight years of average remaining term, according to the JLL materials.

From chicagobusiness.com