Glenstar JV Recaps Chicago Office Complex in $62M Deal
Glenstar has partnered with a private investor for the recapitalization of Presidents Plaza, an 831,442-square-foot office complex near O’Hare International Airport in Chicago. The $62 million, all-cash deal will enable the owners to make additional capital improvements at the two-tower property.
Glenstar, a national commercial real estate owner, developer and operator which has had ownership stakes in the 14.7-acre property dating back to 2006, did not disclose the name of its new equity partner.
However, Crain’s Chicago Business reported earlier this month a venture led by Patrick Halloran of Wayzata, Minn., was under contract to buy Presidents Plaza in a joint venture with Glenstar for more than $60 million. Halloran is an executive with private equity firm Wayzata Investment Partners. Dan Deuter, Tom Sitz and Cody Hundertmark of Cushman & Wakefield represented the seller in the transaction.
The sale is significantly less than the $147 million price tag from 2018, when Glenstar and TPG Angelo Gordon—then known as Angelo Gordon—acquired the office campus, according to CommercialEdge data. In July 2021, the owners refinanced the asset with a 10-year, $147.5 million loan provided by Bank of America.
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Located at 8600-8700 W. Bryn Mawr Ave. in the O’Hare submarket, the buildings are LEED Gold certified and were completed in 1979 and 1982. The campus is at the four-way intersection of Cumberland Avenue and Interstate 90 and served by the CTA Blue line, which allows tenants to recruit employees from both the Chicago suburbs and city. Numerous dining, entertainment and retail venues are nearby.
Glenstar has served as the property and asset manager of the complex since 2006 and its property management team will continue serving tenants on-site and through Glenstar Connect, an app-based platform to improve tenant experiences. Crain’s reported the complex was 63 percent leased at the time of sale, down from 92 percent in 2018.
Upgrades planned
Glenstar and TPG Angelo Gordon invested $34 million to renovate the buildings in recent years. Property upgrades included a three-story atrium lobby, three-level health club, fully renovated lounge, café with full seating and 6,300-square-foot conference center.
The latest infusion of capital will enable Glenstar and the new equity partner to make about $16 million in additional capital improvements to common areas, add a golf simulator and build spec suites to make it easier and cheaper for new tenants to move in. The spec suites will feature open ceilings, collaborative working spaces and conference rooms.
Michael Klein, Glenstar co-founder & managing principal, said in prepared remarks the availability of fresh capital will allow the tenant improvement projects to move forward quickly because they will be insulated from interest-rate pressures and cash constraints. Klein noted companies want to be in top-tier buildings with modern, creative work environments that help with attracting top-level talent.
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