Optibase Makes $12.9M Investment in Chicago

By Keith Loria, Contributing Editor

Optibase Ltd.’s wholly owned Delaware subsidiary, Optibase Chicago 300 LLC, invested $12.9 million in 300 River Holdings, LLC (The Joint Venture Company), which beneficially owns the rights to a 23-story Class A office building located at in Chicago under a 99-year ground lease expiring in 2114.

Optibase’s investment entitles it to a 30 percent interest in the Joint Venture Company. The remaining 70 percent is owned by 300 River Plaza One LLC, which is controlled by the U.S. real estate company Third Millennium Group.

“We are very pleased to have completed this investment in a Class A commercial asset in one of America’s most sought after metro areas,” Amir Philips, Optibase’s CEO, said in a prepared release. “We look forward to working with our partners at Third Millennium Group who have extensive operational experience and knowledge of the local market.”

As part of the deal, WKEM Riverside Member LLC, an existing member of the Joint Venture Company, redeemed all of its 30 percent interest in the company.  In addition, the Joint Venture Company executed promissory notes in the aggregate amount of $60 million in favor of WKEM Riverside Member LLC and 300 River Plaza One LLC. These promissory notes will accrue interest at between four and six percent during the first five years and 12 percent per annum thereafter.

According to Philips, Optibase will continue pursuing further real estate investments in the U.S. and Europe to bring value to its shareholders.

The Joint Venture will seek to fund anticipated tenant improvements expenses for new leases on the property by raising approximately $40 million of additional debt from its members and third parties that will accrue interest at 12 percent per annum and be senior to the promissory notes held by WKEM Riverside Member LLC and 300 River Plaza One LLC. Optibase will have the right to fund up to 30 percent of such additional debt.