Office tower called 'epicenter of downtown Columbus' sold to owner of Chicago’s John Hancock Center

Office tower called 'epicenter of downtown Columbus' sold to owner of Chicago’s John Hancock Center

By Evan Weese

A Columbus office tower has been sold to the owner of Chicago’s iconic John Hancock Center. Hearn Co. has acquired the 25-story One Columbus high-rise at 10 W. Broad St.

A Columbus office tower has been sold to the owner of Chicago’s iconic John Hancock Center.

Hearn Co. has acquired the 25-story One Columbus high-rise at 10 W. Broad St.

Financial terms of the sale by True North Management Group LLC were not disclosed.

The Chicago firm says it’s begun renovating the building’s lobby, corridors, fitness center and tenant lounge.

Hearn, which owns a number of prominent skyscrapers around the country – including the John Hancock Center in Chicago – touts the 32-year-old property as being at “the epicenter of downtown Columbus,” located at the intersection of High and Broad streets and overlooking the Statehouse.

Tenants of the 407,000-square-foot building include naming rights-holder U.S. Bank, the National Federation of Independent Business and Red Capital Group, according to Columbus Business First research.

Greg Thomas and Kirk Smith of CBRE Group Inc. previously handled leasing and, alongside Toronto's Avison Young, represented White Plains, New York-based True North in the sale.

Aaron Duncan and Collin Wheeler of JLL are handling leasing for Hearn's only property in Central Ohio.

“True North always had kind of a five-year hold timeline,” Thomas told me. “They had met that, or were getting very close to that, and they had had some good success leasing the building.”

The building’s occupancy rate was in the low-70s when True North bought it in 2011, Thomas said.

It is now in the low- to mid-80s, he said.

“I think that the appeal to the core (central business district) is there’s lots of organic expansion with tenants,” Thomas said. “We’ve really had strong absorption, we’ve seen various buildings lease up quickly once there’s some money invested in them.”

True North had acquired the property in 2011 for $27 million, according to the Franklin County Auditor, 12 years after it changed hands for $51 million.

An industry source said this month’s sale to Hearn was for $31 million.

 


LaSalle Street zombie gets a $42 million infusion

LaSalle Street zombie gets a $42 million infusion

By Crain's Chicago Business

A venture of Hearn has agreed to inject $42 million into a zombie office building in the Loop that is in need of renovations and new tenants, wrapping up a more than yearlong deal to assume control of the LaSalle Street tower.

LaSalle Street zombie gets a $42 million infusion

A venture of Hearn has agreed to inject $42 million into a zombie office building in the Loop that is in need of renovations and new tenants, wrapping up a more than yearlong deal to assume control of the LaSalle Street tower.

The Chicago-based real estate investment firm and New York-based investment manager Fortress Investment Group have completed the recapitalization deal with Harbor Group International, the owner of the tower at 2 N. LaSalle St., the three firms said in a statement. 

The new investors will spend about $42 million on upgrades to the 26-story tower and sign new leases, which is about one-third vacant, said Hearn CEO Stephen Hearn.

Crain's first reported the deal was in the works in November 2015, but it was unclear at the time how much the Hearn venture was planning to invest to turn around the 691,410-square-foot building.

Norfolk, Va.-based Harbor Group bought the tower for $152.7 million in 2007, as prices were peaking before a real estate crash.

Harbor Group was facing a potential default when the $127.4 million loan—which was packaged and sold to investors as a commercial mortgage-backed securities offering—approached a February 2017 maturity.

The building had become a so-called zombie as vacancy rose in recent years, leaving no funds to sign new tenants and increase rental revenue. Because of the tower's decreased value, Harbor Group was unlikely to find a new loan large enough to pay off the CMBS debt.

In October 2015, the CMBS loan was sent to a special servicer, a company that deals with troubled loans, as Harbor Group sought to modify the loan. 

The statement did not say how much of an ownership stake Harbor Group will retain, and Hearn declined to comment on the exact structure of the deal. The CMBS loan's maturity was extended an undisclosed number of years as part of the recapitalization, Hearn said.

“It's a great building, but it hasn't been in play for several years, and it's been in dire need of fresh capital,” Hearn said. “We're bringing the kinds of things we believe are essential to compete in today's marketplace.”

That includes plans to add a fitness center and tenant lounge and expand the conference center, Hearn said. The tower will also receive cosmetic improvements, and vacant floors will be demolished so they're ready for buildouts by new tenants, he said.

Harbor Group was represented in the recapitalization by James Hanson and Erik Foster from the Chicago office of Toronto-based Avison Young. Michael Curran and Brad Despot of Avison Young have the leasing assignment.

The largest tenant at 2 N. LaSalle is law firm Neal Gerber & Eisenberg, with 187,289 square feet, according to a Bloomberg loan report.

The LaSalle Street building could benefit from a strong leasing market, with downtown vacancy at its lowest level in almost 16 years.

The building can offer a contiguous block of almost 200,000 square feet and “extremely competitive” rents, Hearn said.

Hearn in January sold a smaller tower a block away at 100 N. LaSalle for $32.4 million. Hearn ventures own the office portion of the 100-story John Hancock Center and the 57-story tower at 70 W. Madison St.


HEARN, CrossHarbor Capital Acquire Landmark Office Tower in Indianapolis

HEARN, CrossHarbor Capital Acquire Landmark Office Tower in Indianapolis

By Adriana Pop

In a $40 million deal, Chicago-based HEARN and equity partner CrossHarbor Capital Partners have purchased the 28-story BMO Plaza office building in downtown Indianapolis.

Commercial Property Executive

Indianapolis–In a $40 million deal, Chicago-based HEARN and equity partner CrossHarbor Capital Partners have purchased the 28-story BMO Plaza office building in downtown Indianapolis.

Avison Young brokered the transaction on behalf of the seller, an entity managed by White Plains, N.Y.-based True North Management Group.

Located at 135 North Pennsylvania St., BMO Plaza ranks as the sixth-tallest building in Indianapolis. The high-rise was built in 1989 and is home to several prominent tenants, including BMO Harris Bank, the U.S. Department of Defense, General Electric, Quarles & Brady and Rubin & Levin.

According to Blake Hillemeyer, executive vice-president for HEARN, there is significant potential for the company’s latest acquisition.

“Indianapolis has done a tremendous job stewarding development and growth of the downtown area,” Hillemeyer said in prepared remarks. “We anticipate increasing demand for professional office space, and the BMO Plaza building presents a prime location for potential tenants.”

True North took ownership of the property in October 2009 as the lender for New York-based Crown Properties Inc. and Connecticut-based Greenfield Partners, which were in default. Hearn is now planning to increase BMO Plaza’s occupancy rate of 73 percent by upgrading its fitness center, corridors, restrooms, lobby area and restaurant space, the Indianapolis Business Journal reported.

James Hanson and Erik Foster, Avison Young principals based in Chicago, worked on the transaction in conjunction with Bill Ehret, a principal of Avison Young and managing director of the firm’s Indianapolis office, and Nancy Merritt, a senior associate, also based in Indianapolis.

“This has been a great success story for True North Management Group, which first recognized the potential of BMO Plaza and the opportunity to significantly enhance value through an aggressive modernization and leasing effort,” added Hanson. “With the repositioning successfully completed, True North was then able to sell the asset while still providing upside potential for the buyers.”

The Indianapolis central business district office market has grown steadily over the last few years, with vacancy decreasing and employment growing at twice the national average. Millennial workers are returning to the CBD, greatly increasing the number of residential units planned for the CBD and creating demand for jobs and offices downtown.

Image courtesy of Avison Young