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GENEVA, IL-Inland Real Estate Exchange Corp., based in Oak Brook, has acquired a distribution center at 1900 S. Batavia Ave. The sales price was $25.8 million. The 513,512-sf building was acquired from Boston-based Houghton Mifflin Co. in a sale-leaseback.

Inland Real Estate Acquisitions Inc. negotiated the sale on behalf of Inland Real Estate Exchange Corp., both of which are affiliates of Inland Real Estate Group of Cos. Inc. Houghton Mifflin was represented in the transaction by Cushman & Wakefield. The cap rate was nearly 7.8%.

The textbook and educational publisher has signed a 12-year lease for the building, which was constructed in the late 1970s with a series of additions in the 1980s and a small addition in the 1990s. The lease rate is $3.90 per sf, net, with escalations each year, says Joe Cosenza, vice chairman of the Inland Real Estate Group of Cos. Houghton Mifflin only has two distribution centers, with the other being in Indiana. The Indiana facility distributes college textbooks while the Geneva facility distributes textbooks for students in elementary and secondary schools, which is the more profitable of the two areas of the company, Cosenza says.

Inland Real Estate Exchange Corp. typically has a 10-year hold on properties. Inland was interested in the building for a number of reasons including the quality of the building and the location in the Chicago suburb of Geneva, an area where Inland owns several properties including a nearby shopping center, Cosenza says. The building has “an average 22-foot ceiling height which would be very welcoming to companies,” he says. Additionally, the “rent is at or below market,” he says, as the asking lease rate for the area is between $3.25 per sf and $4.50 per sf, net. The building is also on a 25-acre parcel. If Houghton Mifflin decided to vacate the building, Inland could possibly redevelop the entire parcel, Cosenza says.

Houghton Mifflin is one of many companies that have doing sale-leasebacks with Inland, including AT&T, Atlas Cold Storage, Cost Plus World Market and Citizen's Bank, Cosenza says. “These are companies that do not want the real estate on their books because it does not do them any good,” he says. By selling and leasing back the property, “you have the cash to be able to put it into the parts of the business that make you the most amount of money as opposed to brick and mortar.” Cosenza says Inland expects to do 432 more sale-leasebacks in the next couple of months but said he could not give more details at this time.

Instant Insights /

Inland Buys Distribution Building for $26M

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