The “Grave Dancer” has added a new move, selling a River North parking garage for more than twice what he bought it for in 2013.
A fund led by Chicago real estate billionaire Sam Zell, whose colorful nickname describes his knack for buying distressed assets at low prices, sold the 366-space garage at 33 W. Ontario St. for $16.9 million to Jones Lang LaSalle Income Property Trust, Cook County property records show. The Zell Credit Opportunities Master Fund paid $7.2 million in June 2013 for the garage at Ontario and Ohio streets, when it was tied up in foreclosure, saddled with $13.7 million in debt.
Impark, the operator of the parking garage, “did a good job increasing the net operating income and the brokers did a good job of selling the story,” said John Hammerschlag, president of Chicago-based parking investor Hammerschlag & Co., who was not involved in the deal. “That kind of number was far too rich for my taste.”
The sale illustrates the rewards distressed investors like Zell are reaping after buying overleveraged properties and turning them around. In Chicago, it has worked for Zell on a Wacker Drive office tower and a failed West Loop condominium project.
Prices of all property types in Chicago are rising amid an improving economy, low interest rates and sky-high prices on the coasts, which have made Chicago, where prices have not jumped as much, more appealing to investors. Parking garages are no exception.
A fund led by Sam Zell sold the parking garage in this condominium building for $16.9 million. Photo: CoStar Group Inc.
“There's huge interest right now,” Hammerschlag said. “There are definitely funds out there looking to acquire parking assets. You're buying cash flow, so it's like buying a hotel without the expenses of running a hotel.”
Matthew Berres, a senior vice president at Chicago-based Jones Lang LaSalle who brokered the sale, and a spokeswoman for Zell declined to comment. A spokeswoman for LaSalle Investment Management, JLL's investment arm, which oversees Jones Lang LaSalle Income Property Trust, did not return a call.
In a marketing flier, JLL emphasized the garage's proximity to River North's growing technology sector, population base, restaurants and night life, as well as the garage's potential upside on future parking rates. The facility, built in 2003, is connected to a 60-story condominium tower and is next to a 367-room Embassy Suites.
Since buying the garage, Zell spent more than $110,000 on improvements, boosting its 2015 projected net income to $1.2 million, according to the JLL flier.