After paying a record price for a Chicago hotel in 2011, Sam Zell is poised to break that record with the sale of the same property, the Waldorf Astoria in the Gold Coast.
With five-star hotels fetching lofty prices, the billionaire investor has decided to cash out of the 188-room property at 11 E. Walton St., owned by a Zell fund. He has hired JLL the sell the hotel, among the most expensive in the city, which will go up for sale in the next few months, according to people familiar with his plans.
The Zell fund bought the hotel in November 2011, when it was called the Elysian, for $95 million, or $505,000 per room, a record per-room price for Chicago. Though it's unclear how much the property will fetch this time around, it almost certainly will sell for much more than that today, given how much hotel values have jumped the past three years.
Trophy hotels like the Waldorf have attracted a lot of interest from foreign investors, especially those from China, which are more concerned with preserving their wealth than generating a high return. Anbang Insurance Group of China paid $1.95 billion, or $1.4 million per room, for the Waldorf Astoria in New York. And this month, Greenwich, Conn.-based Starwood Capital Group agreed to sell the luxury Baccarat Hotel in New York to Sunshine Insurance Group of China for $230 million, or $2 million per room, a U.S. record.
“A foreign investor looking for a secure place to put their money is a likely candidate” to buy the Chicago Waldorf, said Ben Thypin, director of market analysis at Real Capital Analytics, a New York-based research firm.
Read More: http://www.chicagobusiness.com/realestate/20150211/CRED03/150219968/-zell-set-to-cash-out-of-waldorf-astoria
In the latest sign that ultraluxury apartment living is spreading far beyond New York and San Francisco, a glass-sheathed tower changed hands in Chicago last week in a deal that is shattering records.
The 60-story building, named OneEleven, was sold for $328.2 million, or $651,000 per unit, the highest price ever paid per unit for an apartment building of more than 50 units in Chicago. The 504-unit building, located in Chicago’s downtown Loop neighborhood, was sold by a unit of New York-based Related Cos. and was acquired by Heitman, a global real-estate investment-management firm based in Chicago.
The purchase price “is emblematic of the seemingly insatiable demand for high-quality, large real-estate assets in primary markets,” said Ben Thypin, director of market analysis for Real Capital Analytics, a commercial-real-estate data and analysis firm in New York.
A Chicago landlord is selling a vintage downtown apartment building for $74 million, more than twice what it paid for the property in 2012.
Waterton Associates LLC is selling the Seneca, a 254-unit building in Streeterville, to Emmes Asset Management, a New York-based real estate investor, according to an Emmes representative. Emmes is paying $74 million for the 16-story building at 200 E. Chestnut St., said the company representative, who asked not to be identified and declined to discuss the transaction.
The sale, which is expected to close by year-end, will generate a big return for Waterton, which bought the Seneca for $35.6 million in March 2012, when it was a hotel-apartment building. The Chicago-based firm spent about $6 million renovating the property and converting it to a pure apartment building.
A Waterton spokesman declined to comment. An executive in the Chicago office of HFF, the brokerage hire to sell the property, also declined to comment.
The sale provides yet another illustration of how investors who bought downtown apartments a few years ago are reaping huge gains by selling today. Amid high occupancies and rents and low interest rates, investors are paying record prices for apartments in Chicago. They're betting that the good times will continue even as competition heats up amid a building boom that will add thousands of units to the downtown market over the next couple years.
The Seneca is the first Chicago acquisition for Emmes, which owns a couple of shopping centers in Peoria. The firm is one of several from New York that are taking a closer look at real estate in Chicago, where prices are still attractive relative to coastal cities like its hometown and San Francisco. New York-based Georgetown Co., for instance, recently paid $215 million for K2, a 496-unit apartment building in the Fulton River District.
“New York and San Francisco are too crazy,” said Ben Thypin, director of market analysis at Real Capital Analytics, a Chicago-based research firm. Investors “want a market that is liquid and a reliable store of value, and Chicago's playing that role right now.”
Read More: http://www.chicagobusiness.com/realestate/20141126/CRED03/141129860/streeterville-apartments-to-fetch-74-million
Chicago-based real estate investment manager Heitman LLC has agreed to pay just over $700 million for a trophy tower in River North, in what would be one of the largest office deals in the city's history.
A Heitman fund has a preliminary deal to buy the 46-story tower at 353 N. Clark St. for nearly $600 per square foot, according to people familiar with the deal. If completed as expected, the sale of the nearly 1.2 million-square-foot tower will rank as the fourth-highest price paid for a Chicago office tower, and the second-highest per square foot.
The high-rise is a block east of the 60-story office tower at 300 N. LaSalle St., which sold in July for a city-record $850 million.
The price for 353 N. Clark St. is more than 80 percent higher than New York-based seller Tishman Speyer Properties L.P. paid four years ago, amid the recession. Tishman bought the building from a venture of Mesirow Financial, one of its developers, for $385 million in 2010.
A spokesman for Tishman and a spokeswoman for Heitman declined to comment. Bruce Miller, a managing director at Chicago-based Jones Lang LaSalle Inc. who is brokering the sale, did not return calls.
. . .
As office building prices have risen, investment returns have fallen. In six major metro markets including Chicago, first-year rates of return for buyers of trophy towers fell to 4.1 percent during the third quarter, the lowest ever recorded, according to Real Capital Analytics. But Chicago has remained a bargain on price per square foot when compared with the hottest coastal markets.
“Over the past two years we've seen much of the action move to places like Chicago, Seattle, Austin and Denver,” said Ben Thypin, director of market analysis at Real Capital Analytics. “Pricing has become so crazy in New York and San Francisco, you can get a higher return for a similar amount of risk in a place like Chicago. Chicago seems to have more room to run yield-wise.”
Read More: http://www.chicagobusiness.com/realestate/20141111/CRED03/141119938/river-north-office-tower-selling-for-700-million
While not as eye-popping as the recent $1.95 billion deal to sell New York City's Waldorf Astoria to a Chinese firm, sales of Chicago-area real estate to foreign buyers are on the rise.
Interest is particularly keen for downtown office buildings, which saw $2 billion in deals with foreign buyers in 2013 and the first half of 2014, representing 26 percent of total transaction volume, according to Real Capital Analytics. This is up from a decade long metro-area average of 16 percent and a post-recession average of 21 percent.
"Chicago has seen an increased amount of foreign investment into its commercial real estate as intense competition for similar assets in markets like New York and San Francisco has driven pricing in those markets to very expensive levels," said Ben Thypin, director of market analysis at Real Capital Analytics.
Manhattan remains the king in sheer volume of international real estate investment of all sorts during the 18-month period ended June 30, followed by Los Angeles and Chicago. In the office sphere, the metro areas with the biggest percentage of foreign deals in the period were Washington, Los Angeles and Chicago, in that order.
But the growing interest in Chicago office towers is seen as a vote of confidence by some observers.
Read More: http://www.chicagotribune.com/business/ct-foreign-real-estate-investment-1019-biz-20141017-story.html
Sales of Chicago-area commercial properties are on pace for their best year since the crash amid an improving economy and low interest rates.
Investors acquired more than $9.15 billion in local apartments, hotels, retail, office and industrial properties through August, up 28 percent from the $7.14 billion spent through the first eight months of last year, according to New York-based Real Capital Analytics Inc.
Sales volume is on track for its highest annual level since its peak in 2007, when $22.5 billion in commercial property sold.
Investor demand for real estate continues to rise amid the slowly growing economy, which is pushing up occupancies and rents, and low interest rates, which has kept borrowing costs low and made it harder to find good returns on other investment types. At the same time, many landlords are capitalizing on soaring prices by putting their properties up for sale. And even higher prices in hot coastal markets are drawing more investors to Chicago.
“Nationally there's more being invested in commercial real estate, but I imagine Chicago is benefiting from the compression in yields and increase in prices in places like New York, San Francisco and Los Angeles,” said Ben Carlos Thypin, director of market analysis at Real Capital.
Read More: http://www.chicagobusiness.com/realestate/20140915/CRED02/140919917/commercial-property-sales-on-pace-for-best-year-since-2007
MetLife Inc. has agreed to pay $112 million for a West Loop office tower, a rare recent case of an insurance company buying a local office property instead of financing someone else's deal.
New York-based MetLife is paying roughly $301 a square foot for the 372,000-square-foot building at 550 W. Washington Blvd., according to a source. The insurer is buying the 16-story tower from Boston-based Beacon Capital Partners LLC, which has owned the property since 2006.
The 12-year-old building is more than 93 percent leased. With financial exchange CME Group Inc. leasing 244,455 square feet through 2024, the property is a relatively low-risk investment to insurance companies, which have been quiet on the equity side in Chicago so far in 2012.
Midway through 2012, insurance companies had invested just $102.6 million in Chicago-area office buildings, compared to $305 million for all of 2011, according to Ben Thypin, director of market analysis at New York-based research firm Real Capital Analytics Inc.
“One of the reasons insurance companies are doing more lending than buying is, during the crash they got burned by some of their purchases,” Mr. Thypin says. “When they're acquiring, it's very high-quality properties. To the extent that they're ramping up their acquisition activity, it's only for the highest-quality properties.
Read more: http://www.chicagorealestatedaily.com/article/20120709/CRED03/120709878?template=printart
Real estate firm Strategic Capital Partners LLC has hired investment banking veteran Keith Getter to step up the firm's fundraising efforts, part of a plan to expand into cities in the middle of the country, like St. Louis and Nashville, Tenn.
Mr. Getter, 49, started this week as managing director of capital markets and business development, a new position at Strategic Capital, an investment firm founded seven years ago by Gene Zink, a former Duke Realty Corp. executive. As a young investment banker, Mr. Getter helped Mr. Zink take Indianapolis-based Duke public in 1993, one of more than 30 real estate IPOs Mr. Getter has been involved in during his career.
“When we started discussions a couple of months ago and Gene asked me to join him in this senior capacity, I think the relationship that goes back a long time was one of the principal reasons I considered it,” said Mr. Getter, who earned his undergraduate degree from Dartmouth College and an MBA from Washington University.
The firm doesn't own anything in Chicago, but that could change, Mr. Getter says.
Because big cities like New York and Washington, D.C., are becoming overpriced, more investors are turning to smaller markets that offer a higher rate of return, says Ben Thypin, director of market analysis for New York-based research firm Real Capital Analytics.
“If you're a foreign investor or an insurance company, maybe you can afford to pay a higher price and get a lower yield,” he said. “But everyone else is not willing to pay those prices, so (investors) are going to be more likely to move into these secondary markets.”
Read more: http://www.chicagorealestatedaily.com/article/20120420/CRED01/120429986/investment-banker-joins-real-estate-firm#ixzz1st2FmSyB
Sales of downtown Chicago office properties have risen 48 percent to $1.12 billion this year as investors purchase buildings outside the prime markets of New York, San Francisco and Washington, according to real estate research company Real Capital Analytics Inc.
“As those coastal markets have become really competitive in many cases, and in some people’s views overpriced, more people are moving to Chicago,” Ben Thypin, director of market analysis for New York-based Real Capital, said in a telephone interview. “There’s so much capital chasing high-quality properties in primary markets.”
Read More: http://www.bloomberg.com/news/2011-09-28/tishman-speyer-venture-sells-chicago-tower-for-217-5-million.html
Ben Carlos Thypin
I am currently the co-founder of Quantierra, the world's first data driven real estate brokerage and investment manager. In my former life as Director of Market Analysis at Real Capital Analytics, I worked with press outlets large and small to provide them with great data and insightful commentary. Here are some of the results of this collaboration. For the rest, please check out the News Archive.