Firm buys industrial property near O'Hare from bank
(Crain's) — A New York industrial real estate investment firm bought a vacant warehouse near O'Hare International Airport for just $9 million as the company looks to double its local portfolio to more than 10 million square feet.
KTR Capital Partners last month bought a 205,540-square-foot building at 1120-1140 Ellis St. in Bensenville from Wachovia Bank N.A., which took back the property in November from a venture of Northbrook-based developer Washington Properties Inc. and a fund managed by New York-based BlackRock Inc.
The purchase price is about 54% of a $16.8-million mortgage the bank made to the venture in March 2007, property records show.
KTR entered the Chicago market in 2005 and now owns 36 buildings here totaling a little more than 5.1 million square feet. Now the firm has money to spend from a $700-million fund for North American investments that closed about a year ago. KTR wants to double its holdings here in the next couple years, says Brian D. Milberg, Chicago-based senior vice-president for KTR.
The firm plans to put in lighting, build out office space and upgrade landscaping at the Bensenville building, Mr. Milberg says. He says KTR expects its investment in the property to be half of replacement cost, allowing the firm to offer an attractive lease rate.
"I think we're going to be able to be very competitive in the (O'Hare) market," he says.
While banks will be taking back a lot of properties, there will be relatively few opportunities to buy newer, institutional-quality assets in core areas like the Bensenville building, says Steven F. Poulos, principal at Oak Brook-based Bridge Development Partners.
The buying opportunities mainly will be in vacant properties such as the one KTR bought, as owners of leased buildings will likely work our arrangements with lenders to keep the assets, says Mr. Poulos, who wanted to buy the Bensenville property and says "we think (KTR) got a great deal."
The Washington Properties-BlackRock venture bought the 10-acre site in 2007, according to Washington Properties' Web site, which calls BlackRock its capital partner. The price was $5.62 million, according to DuPage County.
The property went back to Wachovia in late October via a deed in lieu of foreclosure filed with the DuPage County Recorder.
Washington Properties Principal Jeff Gumbiner and BlackRock declined to comment.
It could not be determined how much was due on the Wachovia loan when the bank got back the property. Wachovia, which was acquired by San Francisco-based Wells Fargo & Co. at the end of 2008, declined to comment.
KTR has hired Colliers Bennett & Kahnweiler to lease the building.
