Chicago Industrial, Meet Westmount
After looking in Chicago for a long time, Dallas-based Westmount Realty Capital picked up a 1.5M SF eight-building industrial portfolio in the O’Hare submarket from KTR Capital Partners (repped by Colliers). “We’ve always been impressed with the O’Hare area in terms of how it’s able to attract business,” Westmount prez and CEO Cliff Booth tells us. The 97%-occupied portfolio’s five largest tenants (which occupy 59% of total SF): Hearthside Food Solutions, Jewel-Osco, Halls Rental Service, Revolution Dancewear, and Gold Eagle. With its airports and the lake (below), plus a creative and business-friendly government, Chicago is well positioned to see continued strength in its industrial market, Cliff says.
NorthMarq Capital’s Dallas office helped Westmount procure the debt. Borrowing on a LIBOR floater with a cap at today’s interest rates was an attractive package, Cliff says. Westmount will enjoy the properties' cash flow out of the gate (cash flow is cool and refreshing), he adds, and when leases expire over the next few years they plan to roll them at higher rates. Westmount has a five-year time horizon to hold the properties, but may sell one or two sooner. Cliff’s optimistic about new development in the market, and says it’s not enough to make him nervous. The team’s eyeing additional acquisitions in the area, especially near the airports (O'Hare below).
There are always quirks when investing in a market for the first time, from how taxes and title are dealt with to new relationships and how leases are drafted. In Chicago specifically, he’s noticed a difference in how tax increases work relative to change of ownership. “You have to keep your antennae up, especially in the beginning. Absorb and listen to what the locals are telling you,” Cliff says. While some experience from other markets may apply, other matters require more sensitivity. Cliff’s biggest hobby outside of work is his six kids; he also enjoys cycling and skiing.