New JV to Invest $100M for Recap, Ownership of Chicago’s Prudential Plaza
- Jun 13, 2013
The iconic 2.2 million-square-foot Prudential Plaza in Chicago will be upgraded and repositioned thanks to a $100 million recapitalization and ownership change at the Class A office towers in the city’s East Loop neighborhood.
An investment group led by Mark Karasick of 601W Companies and Michael Silberberg of Berkley Properties now has the controlling interest in a new partnership with longtime owner and operator, BentleyForbes. The Los Angeles-based private real estate investment firm bought the property, comprised of the 41-story One Prudential Plaza at 130 E. Randolph St. and the 64-story Two Prudential Plaza at 180 N. Stetson Ave., for $470 million from Shorenstein Properties in 2006.
BentleyForbes has been trying to restructure its debt for the last several months before it defaulted on its loans.
“We couldn’t be happier. It’s a long-term win for the property. It will allow it to continue to be a gem of the East Loop submarket,” Chad Lasdon, managing director at BentleyForbes, told Commercial Property Executive.
The new partners plan to immediately move forward with a significant asset improvement program, including redevelopment of the retail concourse, which features more than 90,000 square feet of retail space. The group will focus its immediate attention on One Prudential Plaza, which was built in 1955 and recently lost a significant tenant when law firm Baker & McKenzie L.L.P. gave up about 250,000 square feet of space. Another large tenant, Integrys Energy Group, Inc., does not plan to renew its lease for approximately 196,000 square feet when it expires in 2014. Two Prudential Plaza was built in 1990.
“The partnership is committed to the long-term ownership of the towers and is investing significant resources to attract both traditional and progressive companies to Prudential Plaza that are seeking to secure a Class A office space at one of Chicago’s landmark addresses,” the new ownership stated in a news release.
Prudential Plaza occupies a full city block overlooking Michigan Avenue at East Randolph Street. It has unobstructed views of Lake Michigan, Michigan Avenue, Grant Park, Millennium Park and the Chicago River.
Lasdon didn’t have details on the redevelopment and when work would begin but called it a “broad-based improvement program.”
“It creates an opportunity to reposition, to do some capital expenditures and put new tenants in,” he said. “It’s a big win and will really bring this building back to where it needs to be.”
Lasdon thanked Karasick and Silberberg and the investment team.
“We appreciate the hard work that the new investors have done to help make this happen,” he said. “It’s a great deal in the long run.”
601 W Companies and Berkley Properties, both based in New York, have been active in the Chicago office market. They were part of the investment team that purchased the Bank of America Building at 231 S. LaSalle Street in November 2012 for $97 million. An affiliate of Berkley Properties bought the 915,000-square-foot Civic Opera Building at 20 N. Wacker Dr. in February 2012 for $126 million.