A Minnesota-based investor has a contract to buy a big office complex on the northwest edge of Chicago near O’Hare International Airport in the latest example of high-vacancy properties selling for much less than the owner’s debt.
A venture of Wayzata Investment Partners is close to finalizing the purchase of the two-building Presidents Plaza, according to people familiar with the deal.
An exact price could not be determined, but it expected to fall well short of the $147.5 million loan from Bank of America that is set to mature in less than two years, according to Cook County property records.
It also will come at a big hit to TPG Angelo Gordon, the longtime owner of the towers at 8600 and 8700 W. Bryn Mawr Ave.
Local firm Glenstar, which has held an ownership stake in the property since 2006, is part of the new deal with Plymouth, Minnesota-based Wayzata, according to people familiar with the deal.
If Wayzata’s purchase is completed as expected, it could continue the trend of offices, particularly those with high vacancy, selling at steep discounts to previous values, often also resulting in a huge hit to the lender.
In one other pending deal near O’Hare also involving a Minnesota-based investor, the 12-story One O’Hare Centre office building is in the process of selling for about $70 million, a discount from the $83 million it last sold for in late 2015. That buyer is Onward Investors.
TPG Angelo Gordon, Glenstar and Wayzata did not respond to requests for comment on the Presidents Plaza deal. Bank of America declined to comment.
Then known as Angelo Gordon, the New York-based firm bought Presidents Plaza for $147 million in 2018. Angelo Gordon and Glenstar initially borrowed almost $112.3 million from Bank of America before later increasing their debt on the property to the current balance in 2021.
Cushman & Wakefield brokers began marketing the property in what it billed as a lender-facilitated sale in July.
At the time it went on the market, the complex’s 831,442 square feet of space was just 63% leased, with a weighted average lease term of 5.3 years, according to a brochure.
Brokers bill the offering as a chance to take advantage of $34 million in upgrades made by the current owners, which could be an advantage in an overall sluggish leasing market.
The 12-story towers were developed in the early 1980s. Tenants include the corporate headquarters of hardware store chain True Value.
Although it is within the city, Presidents Plaza is about 14 miles outside the Loop business district. The complex is considered to be part of the suburban office market.
For the record
Cushman & Wakefield brokers Dan Deuter, Tom Sitz and Cody Hundertmark are representing the seller.