X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

CHICAGO-Bids for Prentiss Properties Trust’s local portfolio, which includes 2.2 million sf of office space and 682,000 sf of wholly-owned industrial space, came in as expected with the gross price in the $500 million to $600 million range. President and chief executive officer Tom August says the properties will likely go to “six to eight” buyers, with closings expected over the next 90 days.

Although one industrial asset is vacant and at least two office assets have above-average vacancy rates, the overall capitalization rate for the portfolio is likely to be impressive. “It appears the number will start with a six,” August said in Wednesday’s earnings conference call.

The prize property is the 540,000-sf 123 N. Wacker Dr., which the REIT bought in 1999 for $87.25 million, saw major tenant Aon Corp. leave for the East Loop, then repositioned to a holding that is 97% occupied. Prentiss Properties Trust owns 616,000 sf in two buildings in the O’Hare submarket in One O’Hare Centre at 6250 N. River Rd. and O’Hare Plaza II at 8755 W. Higgins Rd. Four properties in the East-West Corridor total 512,000 sf and three assets in Lake County total 458,000 sf.

Prentiss Properties Trust will spend the next two weeks analyzing the bids, which will likely include conversations with the bidders on details of their proposals, August said. “It’s a little bit complicated, with the different permutations and combinations,” he added.

Besides buyers targeting selected assets, bidders also have raised issues including paying off existing mortgages, income support during additional lease-ups as well as asset swaps. Six office assets are 100% leased, four to single tenants, but occupancy is just 70% at One O’Hare Centre and 66% at O’Hare Plaza II. Meanwhile, three local assets are included in the collateral on a $180.1-million loan at 7.58%. Also, another six years remain on a 6.8% mortgage on One O’Hare Centre, with a balance of $38.8 million, while there is another seven years to go on an 8.05% mortgage on Bannockburn Centre, where the balance is $25.7 million. There is less than four years and $24.2 million left on the mortgage on the 322,000-sf Corporetum Office Campus in Lisle, which carries a 7.02% interest rate.

The Dallas-based REIT hired Holliday Fenoglio Fowler LP in April to shop the city and suburban office portfolio, industrial assets, as well as a 242,000-sf office property in Detroit. Prentiss Properties Trust will reinvest the proceeds, either in newly acquired buildings or development projects, rather than declare a special dividend, August says.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt. NET LEASE 2020Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information
 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.