Beacon Investment Properties’ Office Binge
Beacon Investment Properties picked up 1.4M SF of Chicago-area office buildings in the last six months, and the Hallendale Beach, Fla.-based firm tells us this aggressive growth strategy is just getting started. (Normally aggressive growth is reserved for full moons, but they're bucking tradition.)
Founded in ’03, Beacon is generally focused on secondary markets with better pricing and more favorable cap rates (Minneapolis, Atlanta, Houston before it took off, etc.), managing director of acquisitions Brian Rosen (above) tells us. While Chicago is a primary market, it still fits Beacon’s investment criteria with its diverse economy on the rebound, he says. And they’ve entered the Windy City running, picking up a pair of buildings in the city and a pair in the suburbs faster than most of us clean the gutters. (Though to be fair gutters are very high.) It’s a calculated move to build brand recognition in a new market, director of asset management for Chicago Paul Gaines says.
Beacon’s deals so far total $233M, including: 536k SF 200 W Monroe in the West Loop; 211k SF Park Plaza in Naperville; 393k SF 20 N Clark in the Central Loop; and 259k SF Riverwalk II in Buffalo Grove. All closed quickly thanks to the firm’s short due diligence time frames (they do it up front before being awarded the deal), and that credibility has led to recognition in the market as a buyer of choice, Paul (above) says. Beacon’s national portfolio currently stands at 8.5M SF, and they are planning for exponential growth that focuses heavily on Chicago, says Brian, who came on this year to guide that expansion.
At 200 W Monroe (above, a $100M JV with Israeli firm Harel Insurance Investments and Financial Services), Brian liked the property’s location, diverse tenancy, and heavy rollover. Beacon plans to increase rents significantly like it did at 20 N Clark (below), a success due to renovations, strong demand, and reinvigorated ownership and leasing (by CBRE). A 91% leased high-rise, 200 W Monroe features a recently redone lobby, 34k SF Equinox, and 28k SF floor plates. (Its largest tenant is Select Hotels, a division of Hyatt.) It helps that the Jewish Federation owns the lower portion of the building (113k SF), which is often the most difficult to lease, they say. (Everybody wants the view, but what they don't realize is the folks on the first floor get out of the parking lot faster.) HFF’s Jeff Bramson, Jaime Fink, and Mark Katz repped the seller; HFF’s Susan Hill and Chris Carroll arranged acquisition financing through JPMorgan Securities.
Beacon will continue to target similar Chicago-area office properties with leasing upside and good cash-on-cash returns, they tell us, and their broad competition ranges from REITs to life companies to foreign capital. In a year to 18 months, with a capital infusion from Beacon’s latest discretionary fund it's currently raising (likely $75M-plus, from high-net-worth individuals in the US and Latin America), Brian hopes the company will be that much closer to a critical mass, having acquired a couple more suburban assets along with several office buildings in the CBD. When they’re not closing deals, Brian enjoys going to concerts (Springsteen was a recent highlight) and Paul is a sports guy (he was at the BCS championship in Pasadena).