Office building auctioned for 15% of balance due
3501 Algonquin Road. Photo from CoStar Group Inc.
(Crain's) — A low-profile Northwest Side real estate investment firm was the winner at an auction Tuesday of a vacant, nearly 209,000-square-foot office building in the northwest suburbs, with a bid of $4.5 million.
In what could be the most ambitious deal in the history of the more than 50-year-old firm, Imperial Realty Co. has agreed to pay just $22 a square foot for the former Rolling Meadows headquarters of bottler PepsiAmericas Inc. at 3501 Algonquin Road, which has been mostly vacant since 2005.
Al Klairmont, president of Imperial, which his father founded in 1956, confirmed he was the winning bidder.
The price is about 15% of the $31-million balance on the two loans on the property as of 2003, when Oak Brook-based FBOP Corp., formerly a bank holding company, acquired the loans.
Related story: Former Pepsi bottler headquarters slated for auction
Kelly T. Frank, an executive vice-president with the Chicago-based Auction Services Group Inc., which conducted the sale, did not return a call requesting comment.
The transaction sets a floor on pricing, which will make it easier to sell other assets, said Kenneth Szady, executive director in the capital markets group of Cushman & Wakefield Inc.
"There is a strong private market with capital seeking to buy distressed deals," he added.
Mr. Klairmont, whose firm normally invests in smaller, low-profile office buildings, says he appreciates the challenge ahead.
"We have a 200,000-square-foot building to lease in an incredibly depressed market," he says. "What we are going to do is offer incredible leases in the short run to bring the building to health."
The local economy has not yet hit bottom, Mr. Klairmont says, complicating the effort to turn around the building.
"I think we have something that's exciting, but also very realistic in these troubled times," he says.
The purchase does not include a 3.5% commission, or nearly $158,000, Mr. Klairmont says. The closing is scheduled for mid-August, and Imperial expects to pay all cash.
Imperial was founded in 1956 by Larry Klairmont, who still holds the title of CEO.
