CHICAGO-An affiliate of General Electric Pension Trust, based in Fairfield, CT, has acquired 200 W. Monroe St. from a joint venture with an opportunity fund for the John Buck Co., based here, and San Francisco-based McMorgan & Co. The sales price was $115 million, says Paul Heinen, principal with the John Buck Co. “They were able to acquire it for still-below replacement cost for a building of this type,” he says.
A cap rate was not disclosed. Buck was represented in the transaction by Brian Nagle, with Cushman & Wakefield. A cap rate was not disclosed. MB Real Estate will be the manager and leasing agent for the building.
The 23-story building has a total of 649,265 sf. Not included in the sale was 113,354 sf purchased for reportedly $17.5 million by the Jewish Federation of Metropolitan Chicago in 2005. The building was constructed in 1973 and renovated in 1996. The joint venture acquired the building in 2003, Heinen says. The sales price then was approximately $73.2 million with a cap rate of 10.2%, sources say.
Buck renovated the building in 2006. The lobby was redeveloped, some of the retail was replaced and there were renovations to the elevator cabs and multi-tenant corridors. The cost for the renovations was “several million” dollars, Heinen says. “We basically turned it from what we saw was a Class B building into a Class A, nearly-fully leased building,” he says. “So, the timing was right for us to sell.”
The office space in the building is currently about 91% leased, says Jerry Karr, managing director of GE Assent Management, which advised General Electric Pension Trust in the acquisition. There is 8,538 sf of retail space in the building which is fully leased. Major tenants include Harris Bank, Select Hotel Group, Equinox Fitness and Shoppertrak.
The asking lease rates had been about $30 per sf gross, Heinen says. “There are some leases which are rolling over in the next couple of years which will give GE the opportunity to add value to the building,” Heinen says.
The acquisition of 200 W. Monroe “fits very nicely into our strategy for the office sector in Chicago,” Karr says. GE also owns 230 W. Monroe, which is adjacent to 200 W. Monroe; 181 W. Madison and the Citigroup Center at 500 W. Madison, Karr says. GE acquired the 577,000-sf building at 230 W. Monroe in 2002 for $64.5 million with a cap rate of 10.8%, sources say. The 29-story building at 230 W. Monroe is currently nearly 93% leased with asking lease rates from $17 per sf to $19 per sf net, according to information on MB Real Estate's website, which manages the building. “We like the performance at 230 W. Monroe,” Karr says. “We think that there is really a strong demand for office space that has high quality amenities, high quality lobby (and) is located in the West Loop.” MB Real Estate manages all four of the buildings and Northern Realty handles the leasing for the retail space in all four of the buildings which creates “quite a bit of synergy,” Karr says.
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