Sterling Buying 3 Chicago Buildings for $177M

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CHICAGO-Sterling American Property Inc. is entering the Chicago market with more than $177 million in property purchases; two multifamily buildings and the joint venture buy of the 200 West Adams office tower in the West Loop. The New York-based Sterling is an affiliate of American Securities LP and Sterling Equities LP. Jeff Smith, senior vice president of acquisitions for the New York City-based company, says the firm has been paying attention to Chicago to wait for the right time to buy. The purchases are being made with Sterling American Property Fund V, a discretionary fund in excess of $550 million.

“Five-six years ago, there wasn’t much of an upside, there was an oversupply of new office in downtown Chicago. Acquisition then didn’t make sense,” he tells GlobeSt.com. “Now we have a chance to buy in the West Loop, the best market in the CBD, possibly the best market in the Midwest.”

Sterling acquired 200 West Adams for $113.7 million in a joint venture with Lincoln Property Co. The 30-story, 700,000-sf building is about 89% occupied, and has an average lease rate of $14.50 to $16.50 per sf, says Smith. However, he says the Chicago Housing Authority will be vacating one floor soon to move to other city-owned space. Holliday Fenoglio Fowler LP handled this transaction.

Smith says a $7 million capital improvement plan will be implemented for the 21-year-old tower, which will improve lobby, main entrance and common tenant areas. The plan will also add an onsite management office and a modern conference center. Equity Office Properties Trust was the seller of the building.

Sterling is also entering the Naperville multifamily market, Smith says. The company is closing this week on the 352-unit Windscape Village at 896 Benedetti Dr. for $33.5 million, and plans to close on another 252-unit property in the city in the next few weeks for $30 million, Smith tells GlobeSt.com. He says he cannot reveal the name of the 252-unit property yet. The two apartment purchases are being done in a joint venture agreement with BH Management, Smith says.