We represent a major owner/operator who is interested in partnering with you to acquire a trophy office property in Chicago.
This property (along with a terrific long term fixed rate mortgage which we’ve arranged) will generate a 9% current cash on cash return (which is almost 12% per year with amortization). One of the main reasons that we like this transaction is because the main tenant which is a triple A credit occupies 50% of the building at a way below market rent. They have ten years left on their lease (although they do have an earlier kick-out provision) and are only paying $10.50 psf NNN. This is a way below market lease as evidenced by three recent leasing deals which have been done over the last 12 months (which was the lowest point in the market) at north of $20 psf. Therefore, there is huge upside in this transaction as these below market leases roll to market levels.
In addition, we are buying this one million sf Class A building for less than $200 psf, which is amazing considering other comparable Chicago office towers are selling for between $300-$500 psf.
Most important, is the fact that my client is one of the top operators in Chicago, and presently owns and manages over 5 million square feet of prime office assets. He has a unique vision for this property, and will be a tremendous strategic partner to unlock the property’s value, and navigate the process of moving the below-market rents to market levels, which will significantly increase the value of this iconic property.
So in sum, this deal will provide you with an almost 12% cash on cash return (inclusive of amortization) and a 30% IRR once you reset the leases.
I look forward to speaking with you to discuss this tremendous deal in greater length.
Howard L. Michaels
Carlton Advisory Services, Inc.
560 Lexington Avenue – 10th Floor
New York, NY 10022
(212) 545-1000 office
(212) 867-1305 fax
Carlton Exchange: http://www.carltonexchange.com
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