A Beverly Hills, California-based private equity firm backed by high-profile U.S. business figures has paid $59 million for a two-building office complex near Chicago.
Tryperion Holdings has bought Mid America Plaza in Oakbrook Terrace, Illinois, according to DuPage County property records. The price is well below the $78 million that the seller, Equus, paid for it in 2016 during a stronger investment sales market in 2016.
Tryperion entered the Chicago office market a few months after announcing that it had raised $163 million for its latest real estate investment and debt fund to be deployed into “sub-institutional” investments that are likely to elude the attention of major institutions.
At the time, CoStar News reported that Tryperion was bidding on office properties in gateway markets, while also planning to use the fund for investments in other property types.
The firm said that Tryperion RE Fund IV secured capital commitments from family offices of notable investors such as Howard Marks, co-chairman of Oaktree Capital; Tony Ressler, co-founder of Apollo Global Management and owner of the NBA’s Atlanta Hawks; Ken Moelis, CEO of investment banking group Moelis & Co., and Andrew and Peggy Cherng, founder of Panda Express. Tryperion also said an unnamed top 20 university endowment in the Southeast was an investor in the fund.
Tryperon’s suburban Chicago acquisition was backed by a $36.6 million loan from Continental Casualty Company, a subsidiary of Chicago-based CNA Financial, according to property records.
Near major retail center
The deal lets the firm "invest in Mid America Plaza, one of the top suburban Chicago office assets," Jeffrey Karsh, founder and managing partner of Tryperion, said in an emailed statement to CoStar News. "We believe that our entry basis — well below replacement cost and that of the prior owner — creates compelling long-term value."
The more than 413,000-square-foot complex across from one of the area's largest shopping malls went on the market for sale in June.
At the time, the buildings at 1 and 2 Mid America Plaza were 87% leased with a weighted average lease term of 6.5 years, according to materials from real estate services firm JLL, which brokered the sale.
JLL billed the offering as the chance to buy a well-leased, financially stable property for less than it would cost to build today. Newtown Square, Pennsylvania-based Equus has invested $17.7 million upgrading the lobby and other common areas, according to the JLL brochure.
Tenants including Graycor Services, BCS Financial Crow and Mike Ditka’s Restaurant all renewed leases between 2021 and 2025, JLL said.
"Tryperion has established itself as a contrarian investor, unafraid to buy unloved assets at bargain prices," Karsh said in the statement. "Mid America Plaza fits this mold as, pricing-wise, it was hampered by the stigma of the office sector in general. But fundamentally, this property has proven its ability to maintain stable occupancy and attract strong tenancy in the face of challenging conditions.
"With a new basis, fresh capital and a long-term perspective, we are excited to drive occupancy further and reinforce Mid America Plaza’s reputation as a premier office asset with exceptional access and amenities."
Neil Gallagher, vice president of leasing and marketing at Equus, said in an emailed statement that “since acquiring Mid America Plaza in 2016, Equus Capital Partners has made significant investments in improving the building’s infrastructure and amenity base to create the finest office space available in suburban Chicago. As our investment horizon has run its full 10-year course, we know that we leave our tenants in the fine care of Tryperion Holdings.”
After the sale in Oakbrook Terrace, Equus still is seeking a buyer for the Helmut Jahn-designed MetroWest office building in another western suburb, Naperville. Newmark brokers were hired to find a buyer for that property in October.
For the record
The seller was represented by JLL brokers Patrick Shields, Sam DiFrancesca, Jaime Fink and Bruce Miller.