While the grand total will be affected by how much of a minority interest Prentiss Properties will keep in each asset, company officials suggest the sales could total $600 million. "As we look at that portfolio, it'd never be worth more than it is today," says chairman Michael V. Prentiss, adding closings are likely in the second half of the year. "It clearly is, today, a seller's market."
The prize of the portfolio is 123 N. Wacker Dr., Prentiss Properties' only Downtown office property. The 540,000-sf building, also the largest property in the portfolio, was acquired for $87.25 million in 1999, before major tenant Aon Corp. left it nearly empty in favor of 200 E. Randolph St. Morton International and Meckler Bulger were landed for a combined 136,000 sf, with smaller users in the financial services heavily courted. Occupancy is 96% now, according to the REIT's most recent financial reports, with the average rent of $36.09 per sf is among the highest in the entire Prentiss Properties portfolio.
While hoping to sell its local portfolio, Prentiss Properties is not exiting the market entirely, as it will maintain an office here and allow executive vice president and managing director Larry Krueger to scout value-added opportunities in what has been the company's third largest market behind Washington, DC and Dallas. However, the company's strategy here will be different, Prentiss says.
"We would jump at the chance to do another 123 Wacker there," Prentiss suggests. "The only difference is, our goal today would be to buy it, lease it and then sell it."
In addition, Prentiss Properties would not mind retaining small ownership stakes in the properties, suggesting a range of 10% to 20%. Although the Chicago market has tended to lag others Prentiss is in, the local office portfolio is 87.3% leased, according to the REIT's most recent earnings report, while the industrial properties are 86.1% leased.
In the East-West Corridor, the Prentiss portfolio includes the 323,728-sf Corporetum Office Campus on 75 acres at 550 Warrenville Rd. in Lisle, just south of the Morton Arboretum. Also in Lisle, Prentiss Properties owns the 124,327-sf Corporate Lakes III at 220 Cabot Dr.; the 60,434-sf 410 Warrenville Rd., 100% leased to IKON Office Solutions; and the 66,959-sf 701 Warrenville Rd.
In the hard-hit O'Hare submarket, Prentiss owns the 379,685-sf One O'Hare Centre at 6250 N. River Rd. in Rosemont and 236,000-sf O'Hare Plaza II at 8755 W. Higgins Rd. in Chicago.
Prentiss Properties has three holdings in the north suburbs—the 257,000-sf Bannockburn Centre at the Tri-State Tollway and Route 22; the 137,904-sf 1717 Deerfield Rd. building along the Tri-State Tollway; the 59,130-sf Salton, Inc. headquarters at 1955 W. Field Dr. in Lake Forest.
The industrial assets are a 455,858-sf property at 16801 S. Exchange Ave. in Lansing, two buildings in Wood Dale, and a 110,000-sf building at 155 Alexandra Way in Carol Stream.
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