Investment Case Studies
Suburban prides itself in yielding above average returns for their financial partners. We continue to acquire and increase the value of under-performing properties through redevelopment, efficient management and quality leasing. The case studies below show a few examples of Suburban’s work over the years.
10700 Higgins, Rosemont
Purchased an underperforming multi-tenant office building in the East sector of the O’Hare office market for less than $50 per square foot. Stripped the building down to the perimeter walls and retrofitted the building mechanical systems to facilitate an office condominium product. Brought 19 units to the market with a starting price of $135 per square foot.
Sold out the development in 36 months. Average sales price was $155 per square foot. Project cost was $4 million dollars and total revenue exceeded $6 million dollars.
1804 Naper, Naperville
In pursuit of this property since 2001, ROC Suburban finally negotiated terms of purchase with the out of state owner in late 2006. The purchase price was $4,850,000 or $89 per square foot. The property location and visibility are exceptional, but deferred maintenance and absentee ownership had hindered leasing efforts. Occupancy was less than 80% when we took control of the property.
Employing a “hands-on” approach to management, leasing and construction, strategically investing in building improvements and vigilantly driving down operating costs resulted in improved cash flow, occupancy and value. The building achieved a 100% leasing status within 12 months.
The more interesting play in this deal involved the redevelopment of the site. A plan was conceived to free up the south parking area of the site by erecting a parking deck on the north parcel to accommodate all parking needs of the existing office building. The south lot was then planned for 9,000 square foot of general retail. The plan also calls for inserting drive thru lanes on the eastern elevation of the office building allowing for retail banking on the main floor.
The redevelopment plan has been approved by the City of Naperville. With a 65,000 per day traffic count, demand for retail space at this location will be strong. Net income projections for the property are forecasted to increase by more than 80%, adding more than $5.0 million dollars of value to the project.
4300 Commerce, Lisle
Purchased a 48,000 square foot well-maintained multi-tenant office property from an overseas family trust. Purchase price was just shy of $4 million dollars. The property came bundled with an assumable high interest rate loan that matured in 2007. Historical vacancy in the building hovered for years at 30%.
Total hold period was 26 months. During that time, the building was brought to 100% occupancy and two of the largest tenants renewed and extended their term 10 years. A buyer came forth offering an attractive capitalization rate on the in place income. The property was sold for $7 million dollars. Return on investor equity exceeded 39% on an annualized basis.
4951 Indiana, Lisle
Woodland Business Park (“WBP”) consists of three (3) former Tellabs facilities, totaling 213,018 square feet. WBP is situated on approximately 19 acres and is located just south of Ogden Avenue and I-88 in Lisle, Illinois. WBP property is zoning I-1 and has an abnormally high parking ratio of 5.3 cars per 1,000 square feet of office space. WBP was purchased in 2004 by an East Coast REIT. Unsuccessful in it’s leasing efforts, Ownership elected to subdivide the Business Park into three (3) separate parcels in an attempt to attract a greater audience to facilitate a sale of the property. ROC Suburban purchased the property at $56 per square foot. The purchase price represented a 20% discount to market and is less than 60% of replacement cost.
Two Woodland, 4951 Indiana Avenue, is a 55,000 square foot, single story, industrial flex building, situated on 4.756 acres. The building was built in 1979 and was converted to 100% office use in 1996 by Tellabs. The building was originally designed to accommodate six (6) separate industrial units, each having its own loading dock.
The plan is to return the asset to its original use (industrial flex building). Location and limited supply of this product type in the immediate area support our repositioning strategy.
Using Two Woodland as intended under the current I-1 zoning, we can reduce the parking ratio (5.3 to 1.5), thus creating an opportunity to add 20,000 square feet of rentable space to the site, and theoretically, create an additional $1.6 million dollars in value.