75 N. Fairway Drive
Vernon Hills, IL | 190,000 SF | Investment, Redevelopment
Janko Group purchased a performing first mortgage note on a 190,000 SF office building at approximately 20% of replacement cost due to a single tenant vacating within six months of acquisition. The elderly, absentee owner could not deal with redevelopment/re-leasing risk in a challenging office market. The building fundamentals included institutional quality, large floor plates and generous parking ratio in a large tenant market.
Janko Group purchased the note in an all-equity joint venture, negotiated a deed in lieu from the borrower, and subsequently released the entire building to two credit tenants. Total stabilized costs were approximately 65% of replacement costs, and leverage was added after the acquisition to enhance returns. In August 2015, the 100% leased building was sold; returns to investors, including cash flow during ownership, achieved an internal rate of return of more than 19% and an equity multiple of 1.80.