ATEL Enters Chicago Office Market With River North Acquisition

CHICAGO-Maxsam Capital Corp., an affiliate San-Francisco-based ATEL Properties Inc., has acquired Barnett Capital’s 42,000-sf office building occupied by Seven World Wide at 225 W. Superior in Chicago’s River North neighborhood.

Danny Rabb, director of acquisitions for ATEL, tells GlobeSt.com the company purchased the building for $6.85 million, translating to an average cap rate of 7.1%. Rabb says that the company was most impressed with the tenant’s credit, along with its long-standing lease agreement. Seven World, a subsidiary of the international marketing firm Schawk Inc., has 14 years left on a 15-year lease.

The acquisition is the first Chicago property for the firm, but Rabb tells GlobeSt.com the company is “actively looking” for other Chicago-area opportunities. “It’s a great city, and it’s going to be around for a long time,” he says. “River North is a vibrant area, and it has a great appreciation value.”

According to CB Richard Ellis’ most recent quarterly report, the River North area shows a wealth of opportunity for tenants. With a vacancy rate of 26%, the neighborhood is ripe for improvement. During the second quarter, the 380,000 sf of class A office inventory experienced the most activity with a positive absorption of 6,400 sf. Even more promising are those facilities with current, long-term tenants, says ATEL chief executive officer, Dean Cash.

“The River North area is on fire,” Cash says. “With this credit and the term of the lease, the long-term prospects for this building are the best of any single-tenant deal in the market.”

Andrew Sandquist of CB Richard Ellis worked on behalf of Barnett Capital, while ATEL was represented in-house. ATEL Properties is a wholly owned subsidiary of ATEL Capital Group. The company says it plans to leverage its numerous corporate relationships with investment grade companies to actively pursue the sale-leaseback market.