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NAPERVILLE, IL-Keystone Property Group, based in Conshohocken, PA, is looking to purchase another 300,000 sf in the Chicago area, after its freshman entry into the area in late October when Keystone bought two class A office buildings in the Chicagoland area. The purchases then included the 220,000-sf East West Tech Center here, for $16.7 million, and the 90,404-sf Pine Meadow Corporate Center in Libertyville, for an undisclosed price. Though on different spokes of the suburban Chicago office market, the two properties are in areas that are known for growth.

William Glazer, president of the company, says in a statement that he is attracted to the fundamentals of the Chicago-area office and industrial markets, and is pursing more purchases in the area. Richard Gottlieb, senior vice president for marketing and development for Keystone, tells GlobeSt.com that the firm is already pursuing an 300,000-sf building in the city’s Northwest submarket. He would not disclose in what community the building is located, nor who sold the other properties to Keystone.

“We have to do our due diligence. Hopefully in the next couple of weeks, we’ll know if it is going to go forward or not,” Gottlieb says. “We’re seeing a lot of institutional interest in Chicago, we want to be a part of that. The area has a good stock of older buildings.” He says his company specializes in taking older office and flex properties and fixing them up to create value. “We’re very similar to a spec developer. We buy a building that’s well located, that may need some upgrades, new glass or even new HVAC. We raise the level of the property, even if it’s poorly leased, whether it’s 50% or 100% vacant,” Gottlieb says.

He says a case in point is the Keystone Property Fund II LP closing on the 61% East West Tech Center, at 1717 West Diehl Road, for $16.7 million. Gottlieb says the company is redeveloping the building with exterior renovations and common area improvements. Tenants include the Goeken Group and KJWW PC. “It will take a significant amount of renovation to make the building a higher quality,” Gottlieb says.

The fund also closed on Pine Meadow, on 5.28 acres at 950 Technology Way, within the Libertyville Business Park. Tenants include Snap On Credit, FoxConn, Freescale Semi Conductor, Pro Mentor Group and ATI Technologies. “Pine Meadow needs to be leased up,” Gottlieb says.

The company closed on Fund II in September at $111.4 million. “Fund II allows us to leverage approximately $500 million in acquisitions,” said Bill Glazer in a previous GlobeSt.com interview. Glazer describes as properties sought as “functionally obsolete and capital-starved.” The geographic reach, however, will include the Mid-Atlantic, “but also expand to one or two other markets, such as Chicago, South Florida and the Washington, DC-Baltimore area.”

Funding comes from a mix of institutional partners, private pensions, high net-worth individuals and “funds of funds in which people want diversification,” Glazer says. He tells GlobeSt.com that Keystone Property is targeting investments from $25 million to $100 million. He estimates “from 12 to 15 acquisitions will complete the investment.”

One-third of the new fund is already invested. It includes the previously reported $21-million buy of Valley Forge Park Place, a two-building, 115,411-sf office complex in King of Prussia. “We have a second one-third under contract,” Glazer says, “and we expect to complete use of the fund no later than the second quarter of 2007.”

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