A three-building office complex in the northwest suburbs is set to change hands for more than double what its owners paid for it in 2013, even though its largest tenant just announced it’s leaving.
Philadelphia-based Rubenstein Partners plans to buy Continental Towers, a 911,000-square-foot complex at 1701 West Golf Road in Rolling Meadows from Walton Street Capital and GlenStar Properties for $125 million, sources tell Crain’s.
It will be Rubenstein’s first office buy in the Chicago area.
The joint venture picked up the complex for $58.5 million. At the time, its debt was in distress, and loan servicer CWCapital was willing to sell it on the cheap after previous owner Prime Group Realty defaulted on a $115 million loan on the property in 2010.
Walton Street and GlenStar leveraged the purchase heavily with a $53.7 million loan, betting a turnaround would be possible and bolstered by the bargain they were able to get.
Walton Street and GlenStar recently invested $23 million in upgrades to the buildings.
What makes the timing of this sale stand out is that heavy equipment maker Komatsu, the property’s largest tenant, this week announced plans to vacate its 105,000-square-foot space in 2020.
That blow to the rent roll doesn’t negate the gains made at Continental Towers since it last changed hands.
Occupancy was at just 55 percent in when Walton Street and GlenStar picked up the building. It’s since risen to 90 percent, and net rents have climbed 36 percent, GlenStar’s Michael Klein told Crain’s.