A Phoenix real estate investment firm continues to target the Chicago area, despite being stung in February when Wickes Furniture Co. walked away from a North Side property.
An affiliate of Cole Capital Corp. paid $10.1 million late last month for a new south suburban gym that’s leased to LA Fitness International LLC, property records show. The 45,000-square-foot building at 4340 W. Lincoln Highway in Matteson was owned by a venture that included a principal in Terre Haute, Ind.-based Thompson Thrift Development Inc., which constructed the building last year.
The affiliate, called Cole Credit Property Trust II Inc., which specializes in single-tenant retail properties, paid a lofty $23.5 million in October for a Wickes store at 2606 N. Elston Ave. in Chicago, only to see the retailer file for bankruptcy Feb. 1.
Wickes has terminated its long-term lease on the 48,000-square-foot property, Bankruptcy Court records show.
Cole Credit, a non-traded real estate investment trust, has written down the value of the asset by $3.6 million, according to a filing with the Securities and Exchange Commission. A Cole representative did not return a call requesting comment.
The transactions underscore the challenge for real estate investors of gaining a firm handle on the creditworthiness of their tenants during a time of turmoil in retailing.
Mark Goldberg, a vice-president with Mid-America Real Estate Corp., which brokered both the Wickes and LA Fitness deals, declined to comment on the Wickes transaction. But he said Cole was comfortable with the finances of privately held LA Fitness partly because Cole also recently bought another health club in suburban Minneapolis leased to the Irvine, Calif.-based company.
Cole projects an initial yield of 7.85% on the Matteson deal, according to a SEC filing.
LA Fitness’s lease runs until 2023, not including renewal options. The company pays annual rent of $792,000, or $17.60 a square foot, the filing says.
An executive with Thompson Thrift did not return a call requesting comment. The company was not involved in the Wickes property, which was developed by Chicago-based Harlem-Irving Cos.
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