Franklin Partners pays Heitman $46M for recently seized office complex

Heitman, the lender that seized an Oak Brook office complex this spring after providing a $58 million loan that fell into distress under its previous owner, has found an exit from the property.

Its new landlord is one with experience turning around troubled suburban Chicago offices. Oak Brook-based Franklin Partners paid $46 million to buy the 389,000-square-foot, multi-building property called the Oak Brook 22 complex, at 1211-1315 West 22nd Street in the western suburb, DuPage County records show. The price is a little over $118 per square foot.

The deal comes after the property’s last landlord, a venture of Chicago-based Golub and Boston-based Alcion, transferred ownership of the property to Heitman, an acknowledgement that they wouldn’t be able to refinance the debt without putting up a big chunk of new equity.

The move amounted to a heavy loss for the Golub-Alcion venture, which bought the property for $57 million in 2014, before refinancing with Chicago-based Heitman in 2019. The previous owner also put nearly $26 million into upgrading the property, starting in 2015, including a lobby renovation and improvements to tenant amenities, according to a marketing flier for the property.

It’s unclear how Franklin Partners intends to turn around the asset, which was 75 percent leased as of last summer, when the previous ownership started shopping it by hiring Cushman & Wakefield brokers to lead a sale. It never traded until Heitman decided to take the $12 million loss on its debt.

Franklin previously took on the comeback of a Naperville office building, a 354,000-square-foot property now called The Shuman, that was previously occupied by Office Max’s headquarters until the firm vacated in 2015. Franklin bought it three years later, and took it from completely vacant to 91 percent leased before selling it to Opal Holdings for $73 million in 2022.

Neither Franklin nor Heitman immediately returned requests for comment.

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