Zell Invests in Distressed Chicago Real Estate

June 16, 2011

One of the most successful Chicago real estate investors has purchased another piece of Chicago real estate.

Financier Sam Zell is part of a group that has bought a controlling stake in a premiere office building located at 200 S. Wacker in Chicago.

Zell, his company Equity Group Investments, and Transwestern Investment Co., bought 90 percent ownership in the 40-story, 754,750-square-foot skyscraper that is valued at $106 million and located across from the Willis Tower.

200 S. Wacker

The triangles at the top of 200 S. Wacker are a signature of architect Harry Weese.

“We’re beginning to see an increase in investment opportunities as more lenders and owners bring assets for recapitalization into the market,” said Zell, Chairman of Equity Group Investments.

“The 200 S. Wacker Drive transaction enabled us to acquire an interest in a great asset in a terrific location at below replacement cost, and we did it with strong partners that are also focused on improving the asset and positioning it for leasing success.”

Behringer Harvard REIT I, which acquired the property in 2007, sold the building after defaulting on a $95.5 million loan. The company will retain the other 10 percent ownership interest and will continue to manage the office tower.

“As a result of this joint venture, 200 S. Wacker Drive will benefit from enhanced access to capital and a stronger capacity to fund broker commissions and tenant improvements,” said Stephen Quazzo, co-Founder and CEO of Transwestern Investment Company. “The new ownership team will continue to pursue the program Behringer Harvard has been implementing for capital improvements expected to further enhance the Class-A appeal of this already desirable property and promote rapid lease-up of available space.”

200 S. Wacker is about 30 percent vacant. Current tenants include The University of Illinois, Ziegler Wealth Management, Duff & Phelps Investment Management Company, Regus Business Centers and PNC Bank.

Designed by renowned architect Harry Weese in the late ’70s, the property offers unobstructed views from the east bank of the Chicago River. Amenities include a tenant-only fitness center, a bistro and lounge, conference facilities, a heated executive parking garage and a sundries shop in the lobby.

“We chose to partner with Equity Group Investments and Transwestern Investment Company based on their high statures in the industry, their broad and deep experience, and their track records of success,” said Mr. Robert Aisner, President and co-COO of Behringer Harvard.

“We believe this joint venture offers us and our new partners a superior opportunity to maximize the value of 200 S. Wacker Drive.”

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