Newmark Grubb Knight Frank (NGKF) has completed the sale of a triple net ground lease located at 137 S. State Street in Chicago (the Property) for $7,100,000 on behalf of the seller, a local family trust. The Property was sold to a California-based private investor at a record low cap rate of 3.1%, setting an all-time low for comparable ground lease sales.
NGKF’s Geoffrey Kasselman, SIOR, LEED AP, executive managing director and head of NGKF’s national industrial practice, led the brokerage team representing the seller of the NNN ground lease along with Senior Managing Director Andy Gallas and Managing Directors Gino Tabbi and Boris Shraybman. Situated on .26 acres at the corner of State Street and Adams Street in the Loop, the Property is occupied by a four-story, 50,530-square-foot cooling plant operated by building owner Enwave Energy Corporation, a division of Brookfield Infrastructure Partners, L.P. The ground floor of the property is leased to CVS Pharmacy with floors two through four reserved for the plant’s chillers, pumps and ice machines. The plant provides chilled-water cooling services to over a hundred commercial buildings throughout the Loop via an underground network of pipes.
With its strategic use and heart-of-the-Loop State Street location, the Property offering represented a unique opportunity to acquire a long-term ground lease on a premier in-fill location. The ground lease extends through December 2043 and the tenant has a one-time, forty-nine year lease option.
“The long-term nature of the existing ground lease, coupled with the tenant’s infrastructure investment in the Property, made this investment opportunity one of the more secure cash-flowing opportunities available in the market,” said Gallas. “The seller benefited from a marketplace hungry for core investments, which contributed to the record-low sales cap rate. The buyer will benefit from secure cash flow over the remainder of the lease term, along with the residual value of one of the better located parcels in the city of Chicago.”
Kasselman, Gallas, Tabbi and Shraybman, along with Reuben Warshawsky and Charles Byrum of the law firm of Meltzer, Purtill & Stelle LLC represented the seller in the transaction.
About Newmark Grubb Knight Frank
Newmark Grubb Knight Frank is one of the world’s leading commercial real estate advisory firms. Together with London-based partner Knight Frank and independently-owned offices, NGKF’s 12,000 professionals operate from more than 330 offices in established and emerging property markets on six continents.
With roots dating back to 1929, NGKF’s strong foundation makes it one of the most trusted names in commercial real estate. NGKF’s full-service platform comprises BGC’s real estate services segment, offering commercial real estate tenants, landlords, investors and developers a wide range of services including leasing; capital markets services, including investment sales, debt placement, appraisal, and valuation services; commercial mortgage brokerage services; as well as corporate advisory services, consulting, project and development management, and property and corporate facilities management services. For further information, visit www.ngkf.com.
NGKF is a part of BGC Partners, Inc., a leading global brokerage company servicing the financial and real estate markets. BGC’s common stock trades on the NASDAQ Global Select Market under the ticker symbol (NASDAQ: BGCP). BGC also has an outstanding bond issuance of Senior Notes due June 15, 2042, which trade on the New York Stock Exchange under the symbol (NYSE: BGCA). BGC Partners is led by Chairman and Chief Executive Officer Howard W. Lutnick. For more information, please visit http://www.bgcpartners.com/.
About Meltzer, Purtill & Stelle LLC
Meltzer, Purtill & Stelle LLC (“MPS”) is a law firm with offices in Chicago, Schaumburg, Illinois, and Denver, Colorado, founded 20 years ago with a focus on client service and efficiency. MPS represents a wide range of businesses, financial institutions, entrepreneurs and individuals throughout the Midwest and across the country, including Fortune 500 Companies and start-up businesses. MPS defines it success solely by the needs and objectives of the clients served. The result is an organization designed to attract and support the best attorneys in select practice areas, which is leaner in numbers, deeper in talent, and united by an uncompromising commitment to put the interests of the clients first and last. For more information, please visit www.mpslaw.com.