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CHICAGO-A joint venture between the Alter Group and Heitman Real Estate Investment Management's Global Investment Fund has recapitalized a portfolio of three class A multitenant office buildings for $70 million. The properties total 402,882 sf and are in the suburbs of both Chicago and Washington, DC.
The investment was structured by EnTrust Realty Advisors, LLC, an affiliate of the Alter Group. James Clark III, EnTrust's managing principal, tells GlobeSt.com that Alter was looking for a capital source to invest in the properties while still allowing the company to retain leasing and management control. Clark says Heitman Real Estate Investment Management, the advisor to the Global Investment Fund, was a clear choice.
The Global Investment Fund, Clark says, was formed to invest foreign capital in United States real estate. The fund's sole investor is the Kuwait-based Global Investment House, which is making its first investment in American real estate with a 90% financial interest in the Alter portfolio. Clark says the transaction specifically complies with the strict Shari'ah Islamic banking laws and includes a complex master lease, making the deal appealing to Kuwait investors.
"The transaction structure was unique in that it had to accommodate Islamic banking restrictions," Clark tells GlobeSt.com. "Alter could retain the title and obligation as debtor, yet pass the economics. On the flip side, the investment fund could buy into class A product in key markets and meet investment goals and investment constraints."
The properties, developed by the Alter Group, include Corridors I and II, a 300,000-sf, two-building office complex at 2650 and 2651 Warrenville Rd. in Downers Grove, IL; and Loudoun Gateway II, a 102,882-sf property at 45195 Business Ct. in Loudoun Gateway Corporate Center, Dulles, VA. The buildings were built in 1998, 1999 and 2000, respectively. The portfolio is 87.4% occupied.
In addition to representing The Alter Group in procuring an equity investor and structuring the venture, EnTrust also placed a $53,400,000 first mortgage conduit loan with Lehman Brothers, Inc., as part of the funding for the venture. The loan equates to $132 per sf, and bears a 5.34% interest rate per annum.
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