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LISLE, IL-Griffin Capital, based in Los Angeles, has purchased the Westwood of Lisle complex, 2441 and 2443 Warrenville Rd., for $57.8 million, says Kevin Shields, president of Griffin Capital. The cap rate is less than 7.5%, Shields says. The total capitalization, including a $7.3-million reserve, is $71 million and Griffin Capital plans on owning the buildings for a period of 10 years, he says.

The two six-story office buildings were purchased from an investment fund managed by Hines, headquartered in Houston. Mike Caprile with CB Richard Ellis represented the seller. JP Morgan Chase Bank NA provided a $45-million, 10-year, fixed-rate mortgage.

The buildings, which have a total of 296,486 sf, were purchased for 35 individual tenant-in-common investors completing a 1031 tax-deferred exchange. The majority of the investors were represented by 1031 Exchange Options, Direct Capital, Pacific West, Welton Street and OMNI Brokerage.

Hines will stay on as the property manager for the buildings, Shields says. Hines purchased the buildings in 2004 for $44 million, acquired for the Hines US Office Value Added Fund. At the time of the Hines purchase, Westwood of Lisle I was 92% occupied while Westwood of Lisle II had 58% vacancy. “Hines did an excellent job of renovating and leasing up the buildings,” Shields says. “They bought it when it had a meaningful vacancy.” IBM had been a major tenant in one of the buildings with about 95,000 sf and, when the company moved out of the space, it left a considerable vacancy. The East-West Corridor submarket used to have a lot of technology companies and was pretty “beat up in the tech wreck” but has become more diversified with its tenants, Shields says. The submarket currently has an average vacancy of between 16% to 17%, he says.

Griffin Capital increased the occupancy rate from nearly 94% to more than 98% by the time it closed on the property, Shields says. SXC Health Solutions recently moved into 66,000 sf, bringing the occupancy rate up to 98.2%. There is currently about 11,000 sf vacant. Major tenants include De La Rue Cash Systems, Fireman’s Fund and the US General Services Administration’s Nuclear Regulatory Commission. The average lease rate is between $15 to $16 per sf.

The purchase of Westwood of Lisle is Griffin Capital’s second purchase of an office building in the East-West Corridor submarket in the past year and the third tenant-in-common purchase in the Chicago area. Last September, Griffin Capital purchased Washington Point on behalf of 28 individual investors completing 1031 tax deferred exchanges.

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