Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) and Harbor Group International LLC have bought the One South Wacker office building in Chicago for $221 million. The cost including expenses and other investments is $258 million (NIS 1 billion). Clal Insurance will own 49% of the property and Harbor Group and its affiliates will own 51%.
The One South Wacker building is located in Chicago's West Loop business district. It is a 40 story, 1.2-million square foot (111,000-square meter) office building, designed by Helmut Jahn. It is 80% leased to 40 tenants at an average gross rent of $18.50 per square foot, well below rents in other buildings in the area, enabling capital gains.
Clal Insurance and Harbor Group bought the property from the US Insurance and Annuity Association (TIAA).
Wells Fargo (NYSE) will provide $165 million in financing (loan-to-value of 75%) in a five-year loan bearing 3.75% interest. Clal Insurance's share of the $93 million in equity for the purchase is $46 million.
The purchase of the One South Wacker building is Clal Insurance's first direct purchase of a property in the US. Since the beginning of 2012, Clal Insurance has spent NIS 1.4 billion on real estate purchases, NIS 400 million in Israel, and the rest in the US and UK. The current value of the estate portfolio is NIS 4.25 billion, 50% more than at the beginning of the year.
Harbor Group International will undertake a capital improvements program at the One South Wacker building, to create a new entry atrium winter garden, and to renovate the lobby (including a building concierge station), elevator cabs, common corridors and restrooms. On the mezzanine level will be the tenant only OSW Club with a signature Harbor Fit health & wellness center, conferencing facilities, the building management office, and a tenant lounge overlooking the entry atrium.
Harbor Group also owns three other office towers in downtown Chicago. Electra Real Estate Ltd. (TASE:ELCRE) owns 20% of Harbor Group International, and US and Israeli investors own the rest.
Published by Globes [online], Israel business news - www.globes-online.com - on December 11, 2012
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