New owner of Naperville complex lands new tenant

(Crain’s) — The new owner of a Naperville office complex has landed a big new tenant several months after taking over the property from Transwestern Investment Co., which failed to pay off a loan balance of about $37 million.

The tenant, TriZetto Group Inc., signed an 11-year lease for 41,000 square feet at 1240 E. Diehl Road, one of four buildings that make up the 419,000- square-foot Naperville Corporate Center.

Colorado-based TriZetto, which provides software and services to health insurers and others who pay medical claims, is moving a regional office there from elsewhere in Naperville. The deal fills up the 1240 E. Diehl building and brings the complex to 75% leased.

A venture controlled by TriGate Capital LLC, a Dallas-

based real estate investment firm, acquired the building in June from a Transwestern fund in a deal that valued the complex at $23.26 million, according to CoStar

Group Inc.

The deal apparently wiped out at least some equity for Transwestern, which retains a minority stake in the complex. The sale also resulted in a loss for Wells Fargo & Co., which was owed almost $37 million on a loan as of August 2009.

TriGate invested $8.3 million in equity as part of the sale, while Chicago-based Prime Finance Partners provided a $23.4-million loan, according to a statement in June from Holliday Fenoglio Fowler L.P., which represented Transwestern.

A Transwestern Investment executive and a Prime Finance principal did not return messages. In a brief description on its Web site, Prime Finance says its loan financed the acquisition and provided $7 million in advances to lease the complex.

The deal is likely to help TriGate win tenants.

“The fact that there’s new capital and additional liquidity puts them in a stronger position in the marketplace,” says Jim Adler, an executive vice-president at Oakbrook Terrace-based NAI Hiffman who was not involved in the deal.

A Transwestern fund acquired the property in late 2005, borrowing $42.1 million from WachoviaFinancial Services. Transwestern acknowledged in August 2009 that it had failed to pay back the loan when it came due May 1, 2009, according to a public record. The amount outstanding was $36.7 million.

The Wachovia loan was paid off at a discount. Jeffrey Yarckin, a TriGate partner, declines to disclose the payoff amount. Transwestern Investment still has a minority stake in the complex and sister sister commercial real estate firm Transwestern continues to lease and manage it.

A spokeswoman for Wachovia, which was acquired in late 2008 by Wells Fargo, did not return a call.

TriGate’s $8.3-million investment amount is in the “sweet spot” for the firm, which looks for investments in the $5- million to $20-million range, Mr. Yarckin says. The Naperville deal was the firm’s first in the Chicago area, but TriGate is “actively looking” at one office and one retail opportunity in the area, he says.

The lease talks with TriZetto began after TriGate took over the complex, according to Mr. Yarckin. The buildings are in “great shape,” and TriGate is continuing a capital improvement program Transwestern Investment started, according to Mr. Yarckin.

TriZetto is to be the second-biggest tenant in the complex, says Fred Ishler, a senior vice-president with Transwestern brokerage who leases the complex.

TriZetto is moving from 500 Technology Drive, a 46,000-square-foot building it leases about three miles away. The new location “will provide a significantly upgraded working environment for our employees,” a TriZetto spokesman says in an e-mail.

The new space will be more efficient, according to the TriZetto spokesman. About 210 TriZetto employees will work in the building.

Source: ChicagoRealEstateDaily.com