After buying offices in Chicago at a discount to the property’s debt, a local investor has done the same with a four-building complex in the western suburbs that recently was seized by the lender.
Franklin Partners earlier this month paid $46 million for the Oak Brook 22 office campus in Oak Brook, Illinois, according to DuPage County property records. The seller was the property’s previous lender, Heitman, which took back the property in February.
The recent sale comes after Franklin Partners and investment partner Bixby Bridge last month bought the office portion of the building at 20 W. Kinzie St. in Chicago's River North for $20 million, also well below the value of the debt.
Those deals came as several lenders in recent years either have seized properties or agreed to sell them at a discount to their owners' previous debt as factors such as rising interest rates have pushed down values throughout the country. The trend of landlords handing office properties back to lenders has been accelerating nationally.
Oak Brook-based Franklin Partners’ deals are far below peak values, leaving room to upgrade amenities and fund new leases to turn the properties profitable amid overall weak demand for space.
The previous owners of Oak Brook 22 last July hired Cushman & Wakefield brokers to seek a sale, but after no deal was struck, Chicago-based Golub & Co. and Boston-based Alcion Ventures handed the property back to lender Heitman earlier this year.
Those investors bought the complex formerly known as the Oak Brook Executive Center for $57.5 million in 2014, before refinancing it with a $58.1 million loan from Chicago-based real estate investor and lender Heitman in August 2019.
Earlier this year, Golub and Alcion assigned a loan with a remaining balance of more than $57 million back to the lender, CoStar News first reported in March.
Oak Brook 22 includes 11-story towers at 1211 and 1301 W. 22nd St., connected by a single-story structure at 1225 W. 22nd and near a four-story building at 1315 W. 22nd St. When it went on the market for sale last year, the 389,111-square-foot campus was 75.3% leased, according to Cushman & Wakefield materials.
Built in the 1960s, Oak Brook 22 has retail including a Michael Jordan’s Restaurant that opened in 2017. The complex is just south of the massive Oakbrook Center shopping mall.
Franklin Partners and Heitman did not immediately respond to requests for comment from CoStar News on Friday.
It the recent Chicago deal, Franklin Partners and Bixby Bride paid far below the value of a $60 million loan that the property’s developer and longtime owner, the Alter Group, took out from Bank of America in 2019.
Northbrook, Illinois-based Bixby Bridge already owned the Kinzie Hotel on the lower six floors of the 17-story building before adding the office floors.
For the Record
The seller was represented by Cushman & Wakefield brokers Dan Deuter, Tom Sitz and Cody Hundertmark.