A group of local investors are set to take over Scott Foresman’s former headquarters in Glenview, concluding a foreclosure suit on the property and preparing it for a major redevelopment.
A joint venture between Chicago-based R2 and Wheaton-based T2 Capital Management recently acquired the mortgage on the vacant office campus, the former home of the publisher of the Dick and Jane children’s book series, according to the Cook County Archives. As the owner of the debt on the property, the company is set to take possession of the site in a foreclosure sale on April 25.
Once its debt issues are settled, the property would move closer to its next incarnation, potentially as a large residential development, ending nearly two years of uncertainty. At 19.4 acres, the site at 1900 E. Lake Ave. offers a great opportunity for a developer with money and vision. The R2 company could team up with a developer on a project or just sell the property to one.
“There was no lack of interest (among developers), but the lender was unable to shake things up,” R2 CEO Matt Garrison wrote in an email. . “We stepped into a vacuum to secure title and will work proactively with the Glenview community to make something big happen with the property.”
Still, any plan to clean up the site to make way for something new could face opposition from conservationists, who say the office buildings on the property are worth saving. Landmarks Illinois, a preservation group, placed the complex, which was completed in 1966, on its 2021 list of Illinois’ Most Endangered Historic Places, citing its “mid-century modern design” of architectural significance.
The fate of the campus has been up in the air since mid-2020, when its tenant, Savvas Learning, moved out after its lease expired, relocating most of its employees from Glenview to nearby Northbrook. Through a series of acquisitions over the past few decades, Savvas now owns Scott Foresman titles, including the once-popular Dick and Jane series.
With no tenant to pay the rent, the property’s owner, a subsidiary of Oak Brook’s Inland Group, stopped making payments on the property’s $16.7 million mortgage. Inland hired a broker, CBRE, to sell the property, an attempt to raise money to pay off the debt.
“This is an excellent opportunity for multi-family housing, senior housing, assisted living, residences, offices or end users,” CBRE said in a marketing brochure at the time. “This is a great opportunity to develop an important project in the best part of Glenview.”
But a buyer never stepped in, and the loan manager sought the property’s foreclosure in December 2020. A Cook County judge granted foreclosure in the case on March 10, with a sheriff’s sale scheduled for April 25. Although sheriff’s sales are open to all qualified investors, it is generally a formality that allows a lender to take possession of a property.
Garrison declined to say how much his company paid for the loan, but the sale did not go over well for investors in commercial mortgage-backed securities, or bonds, secured by debt. The loss to CMBS investors was $14.6 million, according to Trepp, a New York-based research firm.
The Glenview property also proved to be a disastrous investment for the investors who owned it. A group of investors led by Inland bought the campus in 2006 for $51.8 million through a so-called 1031 exchange, a transaction that allows them to defer capital gains taxes. on the sale of one property if they reinvest the proceeds in another.
Although the group received rent over the next 14 years, the value of the property plunged with the loss of Savvas in 2020, wiping out its stake. The property was valued at just $5.4 million in September 2021, according to data from Bloomberg.
R2 and T2 are on the verge of making a profit if they can sell the site for a higher price to a developer or partner with one of them on a project that will pay off in the future. In the Chicago area, R2 focused more on projects around the city, particularly on Goose Island. The company recently sold an office building on the island for $47 million, and an R2 company is redeveloping a former Morton Salt warehouse along the North Fork of the Chicago River into an entertainment complex slated to open this summer.
At Glenview, finding a new tenant for the existing empty office buildings, which total 187,500 square feet, would not be easy in today’s market. With more and more people working remotely or only coming to the office a few days a week, companies are reducing their office space. The vacancy rate for the suburban Chicago office market rose to 26.9% at the end of 2021, a record high, according to Chicago-based Jones Lang LaSalle.
A residential development might make more sense. The suburban Chicago apartment market is stronger than ever, with rents at record highs, and developers are especially busy building new projects. Developers completed more than 3,600 suburban apartments last year, approaching the roughly 3,900 they built in 2019, the highest total since at least 1996, according to Integra Realty Resources, a valuation and appraisal firm. advice. They are on track for another great year in 2022.
But the Tories could pressure Glenview officials to oppose any plans to demolish existing buildings on the site. Designed by Perkins & Will, the “complex is architecturally distinguished by its mid-century modern corporate design and use of modern materials and construction methods in a peaceful campus setting,” wrote Landmarks Illinois. when he placed the property on his 2021 “most at risk” list.
The property “should be prioritized for reuse, which will preserve its important suburban design heritage,” the group wrote.
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