While LaSalle Bank is providing a $50.5-million mortgage, TIC Properties raised $27.5 million in equity from tenant-in-common investors, most of them involved in Section 1031 exchanges, according to TIC Properties president Trevor L. Gordon. "Investors from around the country looking to defer the capital gains liabilities from the sale of investment property invested an average of $750,000 in cash proceeds and assumed a pro-rate share of the debt on the property," adds Gordon, whose company has made two acquisitions in the Midwest US before its first in Chicago.
CB Richard Ellis senior vice president Mike Vesper represented Zeller Realty Group and ING. CB Richard Ellis also takes over as leasing agent and manager of the property designed by famed Chicago architect Daniel Burnham. However, Zeller Realty Group and ING were praised for their stewardship of the 90-year-old building on the National Historic Register.
"The previous owners have done a fantastic job bringing this early 20th century asset up to 21st century quality while preserving the historic nature of the property," says TIC Properties chief investment officer Paul Aiesi. Zeller Realty Group and ING acquired Burnham Center in 2001 for $46.2 million, according to property records.
Gordon reports the company already has signed 15,315 sf of new leases and renewed another 18,171 sf since taking over the building, and before CB Richard Ellis assumed the reins Monday. An existing tenant also has signed a letter of intent to renew and expand their lease to 5,000 sf, which would bring occupancy to 85%. "We are confident, and see the strength in the marketplace," Gordon adds.
Alesi says the company hopes to raise occupancy in the building to the "the mid to upper 90% range." For now, Burnham Center's occupancy is in line with the Central Loop submarket, which according to Grubb & Ellis' most recent market report, has a 16.4% vacancy rate. Alesi notes Burnham Center's location near state and federal buildings is an attraction to potential users, including government agencies.
Matt Good with Professional Mortgage Co., Inc. arranged the mortgage with LaSalle Bank.
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