REAL ESTATE | Though it at first was to draw $40 mil., U.S. still did better than expected
December 16, 2009
DAVID ROEDER droeder@suntimes.com
I may have solved a real estate mystery: How much did British investor Bill Davies really pay when he bought the old Chicago Main Post Office at 433 W. Van Buren?
Davies, you'll recall, is the uncommunicative British investor who acquired the massive, vacant building from the U.S. Postal Service. He has shunned reporters' calls since closing the deal in October. He bought the property after initially pledging $40 million at a public auction in August, then blowing two deadlines to close the deal.
He emerged as the winner again when the postal service sold the property via sealed bids. At the time, I had a source saying the price was $17 million. The Tribune said $20.8 million. It turns out we were both wrong. (Yeah, I hear you saying, "Serves you both right.")
Sometimes, simple facts are hard to come by. The deed for the sale listed no price, probably because a federal agency as seller doesn't have to pay the real estate transfer tax.
A source closely involved in the process said the total consideration from Davies to the postal service was about $25 million. That includes a deposit of $4.1 million on the public auction, money he would have forfeited if another buyer emerged. After getting this figure, I ran it by postal service spokesman Mark Reynolds, who vouched for its accuracy.
So $25 million it is, although Davies probably will try to tell the Cook County assessor that his purchase price shouldn't include the deposit. The assessor should tell him that's nonsense.
Even that might not be the end of the matter. Robert Racky, a Chicago developer who attended the public auction, said he will file suit in federal court to overturn the sale. Racky said he was never invited into the sealed-bid auction, even though he registered at the public sale. He said he bid $21 million before Davies and a Chicago lawyer representing Russian and Chinese money sent the price beyond his range.
Racky said there's something rotten about the sale. He charged that he was excluded from the process because of an earlier suit he filed that sought a delay in the public auction. I don't know how far this will get.
But for now, we know the postal service made out better than expected with its auction process, managed by Rick Levin & Associates Inc. Many real estate sages believed the building, costly just to own, actually had a negative worth.
The final mystery here is Davies, his motive and strategy. Still working on that one.
SUNDANCE'S DANCE: It's now been 2 1/2 years since Robert Redford's Sundance Cinemas LLC, which shows independent films, was announced as an anchor tenant for a retail and residential complex at 1137 W. Jackson, where the old Fannie May candy factory was. Investors including IBT Group LLC and Marc Realty tore it down, but the market conditions have barred further progress. The lot at least had a paying user last summer when the horse show Cavalia pitched its tents.
How long can Sundance remain on board for a project that isn't happening? Company spokeswoman Nancy Klasky Gribler said, "We continue to work with [IBT President] Gary Pachucki in the hope that he can move the project forward." Pachucki could not be reached, but in late November he told the Chicago Journal that the eight-screen Sundance theaters may have to be jettisoned to bring the project to a manageable size. He also told the paper one 21-story residential tower is more likely than the proposed two.
ON A HOT STREAK: Shortly after brokering a $32 million sale of a Hoffman Estates office building, Ken Szady and Jim Carpenter of Cushman & Wakefield Inc.'s capital markets group closed on a smaller but still significant sale in north suburban Green Oaks near Lambs Farm. They represented Citibank in the sale of two minimally used industrial buildings totaling 40,000 square feet for about $1 million.
The buyers are Annenberg Investments Ltd. and Moyer Properties LLC, both of Skokie. The buildings are at 14100 and 14101 W. Lambs Lane. Szady called the sale "empirical evidence" that banks are finally ridding themselves of problem properties.
The Hoffman Estates deal, among the largest suburban office sales of the year, involved the 110,000-square-foot Mori Seiki headquarters at 2400 Huntington Blvd. to cash buyer W.P. Carey & Co. LLC.
DOING THE DEALS: W.W. Grainger Inc. plans to open a million-square-foot distribution center at 701 Ferguson Blvd., in Minooka, which to a Chicagoan is out past Joliet, in 2012. ... After many delays and a switch from plans to go the condo-hotel route, the 188-room Elysian hotel has opened at 11 E. Walton. ... Do-Win Enterprises leased 48,000 square feet at 1120 W. Exchange, in the Stockyards Industrial Park, in a deal brokered by Colliers Bennett and Kahnweiler Inc. and Camins Tomasz Kritt. ... Jani-King, a commercial cleaning company, bought a 48,000-square-foot office building at 2900 Golf Road, Rolling Meadows. Grubb & Ellis Co. advised Jani-King, which is relocating from Schaumburg.