Irvine Co., the South California-based real estate firm run by billionaire Donald Bren, has reportedly agreed to purchase a 60-storey, 1.3 million-square feet tower in Chicago from KBS Realty Advisors for $850 million.
In an auction held May 16, Irvine won the bid to purchase the property and the deal is expected to close by June 1, according to Bloomberg. Sources said the bidding process was a competitive one.
The transaction would be the highest amount ever paid for an office property in the Windy City beating the $840 million paid for the 110-level Willis Tower, which was earlier called the Sears Tower. New York-based investors Joseph Chetrit and Joseph Moinian along with Skokie-based American Landmark Properties Ltd purchased the tower in 2004.
KBS Realty purchased the building located at 300 N. LaSalle St. in 2010 for $655 million. It was a record then because the property market had just started recovering from the crash. Price of the 1.3 million-square feet skyscraper has gone up 30 percent despite the stagnancy in income from the building. But its potential and location made it a real catch for investors.
In a telephone interview with Bloomberg, Doug Holte, president of the office-properties division at Irvine said:
"It's one of America's finest office towers," adding that the building was 97 percent occupied. "The location and the product and the tenant roster make it an opportunity we couldn't pass up to expand our Chicago portfolio," he added.
"The River North location with unencumbered views creates permanent value that we believe justifies the price," Holte told the Chicago Real Estate Daily.
Irvine Company also owns other office properties in Chicago. The Hyatt Center located at 71 South Wacker Drive is one of its major assets in the area. The firm owns about 500 office properties in the country in and around Los Angeles, Orange County, Silicon Valley and San Diego.
Check out Irvine's office property portfolio in photos here.
Holte also said that Chicago's improving tech sector and increasing population has made the city a major attraction for investors.
"We just think Chicago's an exceptional value play in this country. It's got all the dynamics of a great city for the next 50 years," Holte said.
Indeed, investors have been flocking to the Chicago office property like moths to a flame. Just at the heels of Irvine's acquisition, a consortium of investors led by Beacon Investment properties LLC completed a deal to purchase a 23-storey office tower in Chicago's West Loop for $100 million.
