Hines puts 300 N. LaSalle on the block
300 N. LaSalle. Photo from CoStar Group Inc.
(Crain's) — Despite the dormant market for mega-deals, developer Hines Interest L.P. is putting up for sale a new skyscraper anchored by Kirkland & Ellis LLP that could fetch a blockbuster price of $620 million.
Hines has hired real estate firm Holliday Fenoglio Fowler L.P. to market 300 N. LaSalle St., confirms John McDermott, a vice-president in Hines' Chicago office. The 1.3-million-square-foot tower opened early last year and is 95% leased, with Kirkland accounting for more than half the building.
Other tenants in the 60-story tower are management consultant Boston Consulting Group, law firm Quarles & Brady LLP and private-equity firm GTCR Golder Rauner LLC.
Mr. McDermott declines to comment on the potential sales price. Some sources say bids could range from $570 million to $620 million. Houston-based Hines prefers an outright sale, but would consider selling a joint venture stake, Mr. McDermott adds.
The development firm, which a year ago was forced by the credit crisis to kill plans for a 1.1-million-square-foot tower on the west bank of the Chicago River, is now hoping the real estate finance markets are about to turn.
"Capital markets come and go, and move more quickly than anyone expects them to," Mr. McDermott says.
Last year, just a single major office building was sold in downtown Chicago, for just $60.3 million.
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Since then, a few key sales in other cities and the response to the recent marketing effort of the office tower at 340 Madison Ave. in New York helped persuade Hines to put the Chicago tower up for sale, Mr. McDermott says.
Major pension funds and overseas institutional investors are regaining their appetite for top-quality assets with long-term leases, says Michael Vesper, a senior vice-president in the investment properties group with real estate firm CB Richard Ellis Inc., who isn't involved in 300 N. LaSalle.
"There clearly is a sense that the trophy assets can command a strong price," he says.
Even so, since Hines started construction on 300 N. LaSalle in 2006, the average price of a Chicago-area office building has fallen 20%, according to New York research firm Real Capital Analytics Inc. And obtaining a mortgage for a purchase as huge as 300 N. LaSalle will likely be challenge.
Hines financed construction of the building with a $310-million construction loan that comes due May 17. The loan includes two, one-year extension options, according to the mortgage. The first extension is not likely to be an issue, sources say.
In addition to the bank loan, Barrington investor Marvin Herb also reportedly provided additional financing for the Kirkland building in an amount that could not be determined.
Almost a year ago, Hines and anchor tenant William Blair & Co. agreed to scuttle plans for a skyscraper proposed for a site at 444 W. Lake St.
