ARLINGTON HEIGHTS, IL-Alex. Brown Realty Inc., based in Baltimore, and Chicago-based Sydney Partners LLC have purchased 545 E. Algonquin Rd., a 111,355-sf flex/industrial building, for $7 million. The northwest suburban property in the O’Hare submarket is about 80% occupied and known as 545 Algonquin Industrial Park. This is the third such purchase for the recently formed partnership between the two real estate investment firms.
“We thought it was very well priced and we thought we could manage it better than the previous owner,” Tom Burton, ABR’s CIO, tells GlobeSt.com. “We’ve been buying industrial assets around the Midwest. It’s an attractive product type, so you don’t see it priced like this very often.”
ABR Chesapeake Fund III, a value-add real estate investment fund sponsored by ABR, provided an equity commitment of $2.9 million to the venture. The ABR/Sydney partnership has already purchased industrial parks in Indianapolis and Des Moines, IA. With leverage around 65%, ABR and Sydney expect the portfolio’s investment capacity to be about $70 million.
Asking lease rates in the single-story building, constructed in 1990, range from $5.50 to $8 per foot, triple net, depending on the amount of office finish the space contains. The building now has eight tenants, the largest of which is Intertech, a consumer products tester which occupies about a third of the building. Burton says he expects occupancy will increase with more attentive management. The previous owner, he says, was an individual who managed the property as a side job.
“We’ll be a better manager; it requires a lot of hands-on work,” Burton says. “The tenants require a lot of attention and if you attend to them well, they tend to stay and renew. You can’t buy it and manage it passively.”