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CHICAGO-GE Asset Management, adviser to the General Electric Pension Trust, has restructured the capitalization of the CitiCorp Center by securing a $250-million, 10-year interest only loan. The financing, which has a loan-to-value ratio of 65%, will pay off an existing debt of $165 million and will allow the building's owners capital for tenant improvements and possible asset growth.
Simultaneously, Orlando-based Estein & Associates USA Ltd. purchased a 50% stake in the building. GE Asset Management controls the 1.35-million-sf building, while MB Real Estate Services LLC leases and manages the property.
Jaime Fink, senior managing director with Holliday Fenoglio Fowler LP, GE Asset Management's adviser, tells GlobeSt.com the Estein deal was valued at approximately $370 million. The new equity was raised by Estein's Germany-based US Treuhand, which also owns a 70% stake in Bank One Center at 131 S. Dearborn.
"The partial interest sale was aggressively pursued by a wide array of investors due to GE Asset Management's recent $20-million renovation," Fink tells GlobeSt.com. "This was coupled with a rare combination of an irreplaceable West Loop location and trophy asset quality."
Chicago's sluggish office-leasing market means steeper competition, especially for aging buildings. CitiCorp, completed in 1987, is challenged by a 68% occupancy rate and rising competition from its newly constructed, high-profiled neighbors. To combat the increasing hurdles, owners of the 40-story building recently invested in a large-scale renovation to attract new tenants.
Located at 500 W. Madison St. in Chicago's West Loop, the office tower was designed by architect Helmut Jahn and is owned by NACA Limited Partnership, an affiliate of the GE Pension Trust. The recapitalization was made possible through a combination of debt and equity, including the acquisition of the partnership interest by Estein & Associates and a loan from New York-based Lehman Brothers. Fink and senior managing director Mike Kavanau led the Holliday Fenoglio Fowler LP team.
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