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Barneys department store building in Chicago
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Thor Equities LLC the New York-based real estate investor signed a contract to acquire Barneys department store building on Oak street, Chicago , for $154 million. The price represents a 32 percent jump from the $117 million that the seller, New York-based Property and Building Ltd. (TASE:PTBL) subsidiary of Tel Aviv, Israel-based IDB Holding Corp. Ltd. (TASE:IDBH) , paid for the property in March 2011. According to Israeli Globes, the company bought the property for $ 122 million of which $42 million was financed from equity and $80 million was financed with a long-term loan.
Barneys New York occupies 90, 000 square feet of the building under a lease that runs through 2024. A Citigroup Inc. bank branch occupies the remaining 4, 600 square feet. The building generated $10.1 million in net operating income last year, according to a Bloomberg L.P. report on an $80 million loan encumbering the property. That would make Thor’s initial yield, or capitalization rate, on the sale about 6.6 percent.
The transaction is among the most expensive retail property sales in the downtown Chicago in recent years.
The sale price reflects the property’s fair value in Property and Building’s books, and it will not report an accounting gain or loss on the deal. Property and Building CEO Segi Eitan told Globes , “The Barneys’ deal reflects the company’s ability to locate and improve unique income-producing assets in terms of their location, timing, and quality of their tenants. The cash-on-cash yield on the company’s investment is 94%”.
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