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Grand Plaza West Sold for $90 Million, Going Condo

By
Illinois Real Estate Journal
Friday, August 26, 2005

CHICAGO | Terrapin Properties has purchased the Grand Plaza West Tower for about $90 million from a partnership that includes U.S. Equities and the River East developers.

The property at 545 North Dearborn is part of a two-building apartment complex that includes the 37-story West Tower and the 56-story East Tower, which was not part of the sale.

Both towers were opened in 2003 and owned by a partnership that includes Joel Carlins, Jim Loewenberg, C.A. “Bud” Cataldo, William Marovitz and U.S. Equities.

Terrapin has renamed the West Tower “The Residences at Grand Plaza”, and plans to convert the apartments to condos. The company has already sold 100 of the 283 units to existing renters in both buildings, says Principal Michael Ezgur.

The tenants get first crack at the condos, and then the units go on sale to the public Sept. 6, he says. The units include convertibles, 1-bedroom and 2-bedroom layouts, and 2- bedroom and 3-bedroom bi-level duplex penthouses.

“The majority of the units will be between $300,000 and $400,000, and the higher end product will go up to about $1.6 million,” Ezgur says.

He says his firm, which is also completing condo sales in Burnham Pointe, 909 Washington and Madison 901, bought the West Tower to capitalize on the luxury settings. The complex had won a Paragon Award in 2004 from the National Apartment Association and had been named Development of the Year by the Greater North Michigan Avenue Association.

“This is truly a great location,” Ezgur told IREJ. “You’ve got the Jewel and Bed, Bath and Beyond right there, abundant parking and even a club on the ninth floor.”

Jim Withington, executive vice president with U.S. Equities, says the strength of the condo market made it too good an opportunity to pass up a sale, helping to refinance the larger tower with German bank Eurohypo AG.

“We looked around and saw that properties were selling at a very attractive cap rate, and thought it was time to take advantage of the strong economy.”

He says the partnership wanted to pay down some of the debt it incurred on the two buildings, and the best choice was to sell the smaller property, and hold on to the East Tower.

“The projects in the 200-300 unit range tend to move quicker. We got very strong financing for the larger tower, which we will own on a long-term basis,” Withington says.

The two-tower complex was originally financed by a $150 million loan from Bank of America.

This project joins another ongoing conversion project at 400 North LaSalle, which has already embarked on its first public offering for units and gathered more than 50 units sold, according to the recently-released Appraisal Research Counselors Second Quarter 2005 Downtown Chicago Residential Benchmark Report.

The report says that more conversions are on the way in the third quarter, including 222 East Pearson (Gold Coast/Streeterville), Printer’s Square at 700 South Federal (South Loop/Printers Row), 1140 North LaSalle (Goald Coast/Near North).

“With the two July 2005 conversions totaling 735 units and the publicly announced conversions buildings projected at an additional 820 units, we are expecting that third quarter conversions could total 1,550 units!” the report says.