An East Coast real estate firm, IndusPAD, is entering the Chicago-area office market on a turnaround mission with a deal to buy a mostly vacant suburban property at a price that marks a huge loss in its value.
The Lawrence, Massachusetts-based company bought the 490,000-square-foot Windy Point office campus in Schaumburg from Jonathan Slager’s Bridge Investment Group at a steep discount.
Bridge offloaded the asset for at least $54 million less than what it paid to buy it, due to the departure of its tenants and the rental revenues they provided. The property was valued at $74 million when the Utah-based REIT bought it in 2018. IndusPAD paid less than $20 million to buy it, according to a person familiar with the deal.
It’s been a rough go for sellers stuck with mostly empty suburban Chicago office buildings that have proven impossible to refill as the pandemic pushed companies to cut back on commercial real estate.
In recent weeks, a venture of the Phoenix, Arizona-based real estate investment trust Orion Office sold an empty 197,300-square-foot Northbrook office building for about $2.5 million, down from $44.3 million that Orion bought the property for in 2011 and marking a loss of about 95 percent in value.
And Los Angeles-based UNICOM Global bought The Martingale in suburban Schaumburg for $7.4 million, even though its previous ownership spent $30 million renovating the property prior to selling at a big devaluation. The 342,000-square-foot property will be renamed UNICOM Innovation Park and house a global innovation lab for the company.
IndusPAD, which is helmed by Jitender and Purnima Makkar, may have a similar vision in store for Windy Point. It plans to reposition the property and bring in new tenants, and the firm’s website shows it specializes in creating and managing mixed-use assets that can serve a diverse set of tenants with manufacturing, research and innovation, office and light industrial needs. The new owner plans to repurpose the property with an eye on trends in the office market and related uses, Purnima Makkar said.
The two-building Windy Point campus features structures of 11 and seven stories, and was marketed for sale by Newmark and put under contract through an auction in November. A spokesperson for Bridge did not return requests for comment.
The property was 85 percent leased at the end of 2022 and known reductions in space include pharmaceutical company OptumRx, which is going to leasing a single floor from its previous footprint consisting of the entire 11-story, 300,000-square-foot building on the campus. That, along with Comcast’s reduction of its lease at the building with plans to fully vacate, will bring occupancy down to 20 percent in the spring. Comcast in 2015 inked a seven-year, 73,000-square-foot lease through 2023 and now has less than 70,000 square feet.
IndusPAD receives $4.5 million as a contractual payment for the cuts to the leases, according to the property’s marketing materials.