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John Hancock Center

Chicago, IL

In June of 2013, FVP and its partners were involved in the acquisition of the John Hancock Center, the seventh largest building in the U.S. and the fourth largest in Chicago. The purchase included 900,000 square feet of office, the 710-car parking garage, most of the lobbies and common areas, and the building-naming rights. The building’s anchor tenants include advertising agencies IPG and Draft FCB.

The asset was acquired in a distressed sale after the lender (Deutcha Bank) foreclosed on the asset. The building was subdivided wiht the building anntenna, observatory, and retail components sold off indipendently to 3rd parties. FVP helped assemble a team that included local management firm Hearn as the lead local partner and an institutional LP equity participant. The investmets stragety focused on a major capital investment to modify the lobby, amenities and common area, managing a leasing strategy to stablize the asset and exploring naming rights options. The asset was stablized and refinanced with substantially most of the invested equity returned within the first 36 months of acquisitons.

PROPERTY INFORMATION

Location Chicago, IL

Address 875 N. Michigan Avenue

Property Type Office / Mixed-Use

Description 100 stories Urban High Rise

Vintage Built 1970

Property Size 900,000 SF rentable + 715 spacer car garage

Acquisition Date Jun-13

Investment Strategy Distressed Purchase

Total Capitalization $180,000,000

website: www.875northmichiganavenue.com

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John Hancock Center
Partnered with Hearn / Mount Kellet / the Lynd Companies; 7th largest building in U.S. and 4th largest in Chicago; included 900,000 SF of office, 710-car parking garage, most of the lobbies and common areas, & the building -naming rights; lead tenants include advertising agencies IPG and Draft FCB
Information
Location
Chicago, IL
Property Type
Commercial
Property Style
Mixed-Use
Description
100 stories Urban High Rise
Size
900,000 SF
Acquisition Date
May 9, 2009
Net IRR
18%
Net Multiple
2.28x
Total Cap
210,400,000
GALLERY
john_hancock_center
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The purchase included 900,000 square feet of office, the 710-car parking garage, most of the lobbies and common areas, and the building-naming rights. The building's anchor tenants include advertising agencies IPG and Draft FCB. The asset was acquired in a distressed sale after the lender (Deutcha Bank) foreclosed on the asset. The building was subdivided wiht the building anntenna, observatory, and retail components sold off indipendently to 3rd parties. FVP helped assemble a team that included local management firm Hearn as the lead local partner and an institutional LP equity participant. The investmets stragety focused on a major capital investment to modify the lobby, amenities and common area, managing a leasing strategy to stablize the asset and exploring naming rights options. The asset was stablized and refinanced with substantially most of the invested equity returned within the first 36 months of acquisitons.[/vc_column_text][/vc_column][vc_column width="1/2" el_class="fdTopcol-right imgH100"][vc_single_image image="1547" img_size="full" css_animation="fadeInUp" css=".vc_custom_1689707186527{margin-bottom: 0px !important;}"][/vc_column][/vc_row][vc_row full_width="stretch_row_content_no_spaces" equal_height="yes" el_class="fdinfoRow"][vc_column width="1/2" el_class="fdTopcol-left" css=".vc_custom_1676223004572{background-color: #f2f2f2 !important;}"][vc_custom_heading text="PROPERTY INFORMATION" font_container="tag:h3|text_align:left" use_theme_fonts="yes" css_animation="fadeInUp" el_class="infoSignleTitle"][vc_column_text css_animation="fadeInUp" el_class="fdInfoText"]Location Chicago, IL Address 875 N. Michigan Avenue Property Type Office / Mixed-Use Description 100 stories Urban High Rise Vintage Built 1970 Property Size 900,000 SF rentable + 715 spacer car garage Acquisition Date Jun-13 Investment Strategy Distressed Purchase Total Capitalization $180,000,000 website: www.875northmichiganavenue.com[/vc_column_text][/vc_column][vc_column width="1/2" el_class="fdTopcol-right fdImgGrid" css=".vc_custom_1676392206416{margin-top: 20px !important;}"][vc_row_inner equal_height="yes"][vc_column_inner width="1/2"][vc_single_image image="1548" img_size="full" css_animation="fadeInUp" css=".vc_custom_1689707235598{margin-bottom: 0px !important;}" el_class="imgW100"][/vc_column_inner][vc_column_inner width="1/2"][vc_single_image image="1582" img_size="full" css_animation="fadeInUp" css=".vc_custom_1690224883631{margin-bottom: 0px !important;}" el_class="imgW100"][/vc_column_inner][/vc_row_inner][vc_row_inner equal_height="yes"][vc_column_inner width="1/2"][vc_single_image image="1583" img_size="full" css_animation="fadeInUp" css=".vc_custom_1690224911994{margin-bottom: 0px !important;}" el_class="imgW100"][/vc_column_inner][vc_column_inner width="1/2"][vc_single_image image="1584" img_size="full" css_animation="fadeInUp" css=".vc_custom_1690224929933{margin-bottom: 0px !important;}" el_class="imgW100"][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][/vc_section][vc_section full_width="stretch_row" css_animation="fadeInUp" css=".vc_custom_1690310914132{margin-top: 20px !important;margin-bottom: 0px !important;background-color: #0d0733 !important;}" el_class="developerInfoImg"][vc_row equal_height="yes" content_placement="middle"][vc_column width="1/3"][vc_single_image image="1842" img_size="full" alignment="center" css_animation="fadeInUp"][/vc_column][vc_column width="1/3"][vc_single_image image="1841" img_size="full" alignment="center" css_animation="fadeInUp"][/vc_column][vc_column width="1/3"][vc_single_image image="1843" img_size="full" alignment="center" css_animation="fadeInUp"][/vc_column][/vc_row][/vc_section][vc_section disable_element="yes"][vc_row full_width="stretch_row_content_no_spaces"][vc_column][vc_single_image image="1281" img_size="full" alignment="center" css_animation="fadeInUp" el_class="imgW100"][/vc_column][/vc_row][/vc_section][vc_section el_class="pt-0"][vc_row full_width="stretch_row_content_no_spaces"][vc_column][vc_gmaps link="#E-8_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" css_animation="fadeInUp" el_class="googlemapFd"][/vc_column][/vc_row][/vc_section]

Partner With Logo:

Key Investment Characteristics

  • Acquire at Below-Value Price: Acquired bundle of fractured components at a significant discount to replacement value and below market value on a free-standing basis, presenting the opportunity to reposition the iconic, institutional-grade asset for creative and marketing office users valuing breath-taking views, excellent transit, etc.
  • Limited Competition: the fractured nature of the asset reduced competition and created an oppor-tunistic advantage for FVP and its partners to acquire this timeless, attractive, highly efficient landmark, with a full range of floorplates 35% larger than the nearest competitor, ideal for the grow-ing and dynamic tenancy, including credit-worthy headquarters, comprising a superior rent roll
  • Promising Underwriting: The asset’s fractured nature presented an opportunity for flexibility in the disposition, including the city’s only high-profile naming rights, on this world-renowned,skyline-defining anchor on one of the busiest retail corridors, and an incoming high-profile tenant increasing occupancy to 92%, a 19% improvement
  • Below-Market Performance: Ability to add value through capital improvement programs and marking leases to market in Chicago’s premiere office market, with best-in-class tenancy – the only submarket immune to oversupply, due to high land values, high street retail, luxury residential and hospitality

Project Execution & Results

  • Tripled NOI, from $5 million to $16 million, after investing $70 million in base building and tenant improvements, providing income security and minimal ongoing capital requirements, while the sub-market’s Class A office supply direct vacancy reduced from 12.3% to 6.3%
  • Unrealized net returns are projected at 18% IRR and 2.28 equity multiple, not including additional added value potential due to the ability to raise rents for $3 million of NOI from three tenants 21% below the market and through cornerstone generational naming rights, creating opportunity for continued revenue enhancement through unrivaled brand recognition ($9.9M sponsor equity from FVP capital partners; $56M in 3rd-party equity).