Sovereign Capital Acquires Congress Center in Chicago for $95M
By Keith Loria, Contributing Editor
Sovereign Capital Management Group, a San Diego-based real estate company, has purchased Congress Center, a Class A, 524,800-square-foot, 16-story office tower in downtown Chicago, Ill., for $95 million.
The property was acquired through a joint venture between American Recovery Property Trust, a Sovereign managed entity, and New York based Northwood Investors. Brookfield Financial acted as the advisor to ARPT.
“We felt it is a great asset in a great location and at $95 million, it’s a great price,” Todd A. Mikles, Sovereign Capital Management Group’s CEO, told Commercial Property Executive. “Our goal is to continue recapitalizing properties in the Triple Net Properties portfolio—specifically, challenged properties acquired at the height of the real estate market.”
Congress Center is located at 525 W. Van Buren in the West Loop, which was delivered to a high specification in 2002 and is leased to a variety of investment grade tenants, including the U.S. General Services Administration, North American Company for Life and Health Insurance, and AkzoNobel.
Built in 2001, the building offers approximately 520,000 square feet of rentable space and the building’s amenities include a two-story lobby that features granite, glass, exotic wood and stainless steel trim, 24-hour monitored building security and a secure heated indoor executive parking garage.
Mikles explained that because of the property’s last ownership structure—a tenants-in common or TIC arrangement—operating the property was challenging.
“This was acquired using a tenant-in-common structure back in 2005, so you had 35 people come in and buy a 1/35 interest,” he said. “The problem with a TIC structure is that raising money is difficult and you need a certain percent to approve leases.”
By acquiring the property from Daymark Realty Advisors and removing the TIC structure, Sovereign helped investors preserve any equity they had left and maintain their tax status.
“Our mission is to work with the tenant-in-common groups and recapitalize those guys, which is what we’re doing,” Mikles said. “We want to work through these TIC groups to try and help them and at the same time, buy some good assets.”
Plans are underway for capital expenditure projects that will be instituted in the building over the next 18 months.
“Congress Center is a quality asset that is now under ownership with the financial strength necessary to invest in the building and lease the remaining vacant space,” Mikles said. “Now that it’s free of the TIC structure, we are open for business and we are looking for tenants.”