Aries Capital, LLC has closed a $3.4 million non-recourse loan for the acquisition of an 8,700-square-foot restaurant building at 164 E. Grand Avenue in Chicago’s Streeterville neighborhood. SVN | Chicago Commercial brokered the sale on behalf of the seller, R2.
Aries chairman and CEO, Neil Freeman, and Brandon Perdeck, vice president in Aries Capital’s Miami office, originated the transaction. Scott R. Maesel and Drew Dillon of SVN | Chicago Commercial represented R2.
The property is fully occupied by restaurant tenant The Hampton Social and sold for $6,320,000. Property highlights include an ideal corner location, only a block off Michigan Avenue and high-density zoning for future development. The property was purchased by German investor, René Gerdom CEO of Ruger Holdings.
“This transaction shows that there is still robust demand for hospitality assets with strong tenancy in Chicago even during the COVID-19 pandemic,” said Dillon.
The five-year, fixed-rate, non-recourse loan was arranged through a local bank on behalf of borrower Rüger Holding at an interest rate under 4 percent with a 60 percent loan-to-value ratio and 25-year amortization. Existing tenant, The Hampton Social, is owned and operated by Chicago-based Parker Restaurant Group and will continue its 10-year initial term lease ending in 2027.
The financing was successfully obtained during a time when an unprecedented number of restaurants nationwide are struggling to make rent payments or closing due to financial strain brought on by COVID-19 related occupancy restrictions and disrupted customer demand. According to a study by the National Restaurant Association, as of the beginning of December 2020 over 17 percent of the country’s restaurants had shuttered permanently.
“Although financing the acquisition of a restaurant-dependent asset while restaurants are being crushed by 25 percent occupancy constraints seems taboo, we have a relationship with an open-minded lender who was able to look beyond generalities and recognize the nuances of this specific deal,” said Freeman. “We got the deal done for our client despite these challenging circumstances because we successfully demonstrated that the sponsor is a reliable borrower who is providing a strong equity commitment for a well-located long-term real estate asset and showed that the property’s value will be insulated long-term with little risk of the loan defaulting.”
Located at the corner of Grand and St. Clair and just one block east of the Michigan Avenue Shopping District, the property is close to mass transit and offers long-term development potential with an underlying DX-12 zoning and a well-established population base. The purchase is the first Chicago investment for Rüger Holding, an experienced commercial, residential and hospitality real estate owner and developer in the United States and Germany.
“We are excited about completing our first acquisition in Chicago. Thanks to our track record, an attractive asset with a quality tenant and Aries Capital’s expertise and relationship with the lender, we were able to successfully close in an unprecedented economic environment. We look forward to calling on Neil’s and Brandon’s financing relationships again as we acquire additional properties and expand our footprint in Chicago and throughout the U.S.,” said said Gerdom.