There's a lot of money to be made below street grade. That's the lesson we've learned after a foreign JV bought the lease rights for the parking garages beneath Chicago's three marquee downtown parks.
Northleaf Capital Partners, based in Toronto, and Sydney-based AMP Capital bought the lease rights under Grant, Millennium and Maggie Daley parks for $370M. With 9,176 parking spaces, it's the largest underground parking system in the country, Crain's reports. But ownership of the garages has had a spotty recent history.
In 2006, a Morgan Stanley venture paid $563M for the lease rights, in a 99-year deal financed with $403M in debt. (The Daley Administration later signed away the rights to Chicago's parking meter system to another Morgan Stanley venture in a similar, much-ballyhooed deal.) Morgan Stanley saw its investment value plummet during the Great Recession, defaulted on the debt and walked away from the lease in January 2014.
The garages' fortunes have turned for the better recently. The venture that took over from Morgan Stanley saw a 17% increase in revenue two years ago, while net operating income rose 34%. With downtown fast becoming a 24/7 live-work destination, the long-term potential of the garages looks promising. Being below one of the largest green-roof projects in the world in Millennium Park doesn't hurt. [Crain's]
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