A group of investors advised by the investment management arm of Grubb & Ellis Co. has finally agreed to sell 525 W. Van Buren St., a mid-rise office building on the edge of the West Loop, for $130 million — $6 million less than they paid for it five years ago.
Amid the ongoing credit crisis, the transaction is the first example of a significant downtown commercial real estate asset changing hands for less than the seller paid.
The purchase price is about $20 million less than the $150-million price tag the 522,000-square-foot building had been expected to fetch in the beginning of the year, when the most recent marketing campaign began.
As a part of the purchase, buyer Franklin Street Properties Corp. will assume an existing $97.5-million mortgage that matures in six years, according to a document filed Monday with the Securities and Exchange Commission by Boston-based Franklin Street. The annual interest rate on $95 million of the debt is 5.6%, the filing says, while the interest rate on the balance of the mortgage is 7.0%.
The sellers are investors who were originally advised by Triple Net Properties LLC, whose parent company, Santa Ana, Calif.-based NNN Realty Advisors Inc., bought Grubb & Ellis in 2007. The combined parent company took the Grubb & Ellis name.
CoStar says the vacancy rate has risen to 20.8%, compared to 9.0% during the fourth quarter of 2006. And leases for several key tenants expire between 2011 and 2013, when the overall downtown office vacancy rate is widely predicted to rise.
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