Igor Olenicoff, Orange County’s third-wealthiest businessperson, should be a bit richer after the sale of his company’s most valuable office property—a skyscraper it owned in downtown Chicago.
Olenicoff’s Olen Properties Corp., a Newport Beach-based commercial real estate investor and developer whose office portfolio totals nearly 8 million square feet, recently completed the sale of One South Dearborn, a 40-story office tower in the Loop district.
The building was bought by an affiliate of Greenwich, Conn.-based investment giant Starwood Capital Group. Financial terms of the deal were undisclosed by the buyer and seller, both of which are privately owned.
Commercial real estate brokers in Chicago familiar with the trophy property said the 841,000-square-foot building was listed for sale last year with an asking price of about $400 million.
Olen bought the tower in 2006 for a reported $362 million, or about $447 per square foot, the company’s biggest-ever acquisition. It was reported to be a record-setting price per square foot paid for a Chicago tower then. It appears it was a money-making investment for one of OC’s largest commercial real estate owners.
Asking prices at some high-end Chicago skyscrapers have since ballooned; Newport Beach-based Irvine Co. reportedly paid nearly $650 per square foot for a tower there a few years ago. It owns three in the city, including a 60-story office it bought in 2014 from an affiliate of KBS Realty Advisors in Newport Beach (see story, page 1).
The 300 North LaSalle tower went for about $850 million in one of the priciest single-building office buys any OC real estate company has ever made.
High-end offices in OC’s airport area, by comparison, have recently been trading at nearly $400 per square foot.
Debt-Free
Olenicoff declined to comment last week on the sales price for One South Dearborn, citing strict nondisclosure agreements with the buyer.
“I can say that Olen has owned it for 12 years and is quite pleased with the return we received over those years,” said Olen’s president, whose fortune the Business Journal conservatively estimates at $4.2 billion.
Olen paid off a $280 million mortgage tied to the tower a little more than a year ago after reupping the building’s largest tenant, law firm Sidley Austin LLP, to a long-term, 575,000-square-foot lease.
Olenicoff said then that the Sidley Austin lease, which expires in 2030, would generate over $400 million in rents over its term.
“It is a beautiful building and well positioned to perform very nicely for Starwood,” he said.
Starwood bought the tower using its Starwood Global Opportunity Fund X, a $5.6 billion investment fund created about three years ago.
The buyer said it funded about $300 million of the undisclosed purchase price with a loan provided by ING Capital LLC and Deutsche Asset Management.
Exiting Chicago
One South Dearborn was Olen’s sole Chicago office holding, and it’s not planning to invest in the Windy City anymore, Olenicoff said last week.
“Our sale was primarily driven by our desire to acquire properties that we would manage and where we already have a corporate presence in the area,” he said.
“Chicago was a wonderful area and investment when we made it, and having recently renewed the Sidley Austin lease for another 12 years, we felt it was a good time to sell and move our investment back into our core areas, namely Orange County, Las Vegas, Phoenix, Atlanta and South Florida.”
In September Olen bought Newport Corporate Tower about a mile from John Wayne Airport in Newport Beach near the intersection of MacArthur Boulevard and Von Karman Avenue.
It paid about $395 per square foot, or a little more than $75.2 million for the nine-story tower, the most it’s spent on an acquisition in the county in over a decade.
Olenicoff said his company plans to put the proceeds from the Chicago sale into a series of apartment deals in coming weeks.
In addition to its commercial property holdings, much of which are in OC, Olen owns an apartment portfolio of more than 13,000 units, most outside of California.
