MINNEAPOLIS--(BUSINESS WIRE)--The 57-story IDS Center, Minnesota’s tallest office tower and Minneapolis’ signature skyscraper, has been acquired by Beacon Investment Properties, LLC of Hallandale Beach, FL in a joint venture with Tel Aviv-based Harel Insurance Investments & Financial Services Ltd. and Menora Mivtahim Insurance Ltd. from Inland American Real Estate Trust, Inc. Oak Brook, IL for $253 million.
The 1.4 million-square foot glass and steel postmodern architectural landmark, with its 25,000 square foot indoor park and fountain, has a 93% leased office tower and the two-level retail plaza called Crystal Court which is 100% leased.
Located at 80 S. 8th St., and occupying a full square block of the Nicollet Mall in what is considered the epicenter of downtown Minneapolis, the IDS Center was designed in 1972 by architect Philip Johnson, known for creating iconic corporate headquarters including the Seagram’s Building in New York City and the Pittsburgh Plate Glass Center in Pittsburgh.
Ariel Bentata, chief investment officer and founding partner of Beacon Investment Properties, said, “Our company is delighted and proud to own the premier office complex in one of America’s most progressive and dynamic markets, the Twin Cities. It is a stable asset with long term tenants and a history of strong financial performance. We are honored to assume the stewardship of IDS Center from Inland American which took very good care of this commercial real estate icon during its seven year ownership. We will carry on that tradition.”
He said Beacon looks for “value creation opportunities” and will add a conference center, an extensively-equipped fitness center plus enhancements to the Crystal Court in the coming months.
Claudio Dombey, a founding partner and chief of investor relations, cited the “solid support of our partners Harel Insurance Investments & Financial Services, Ltd. and Menora Mivtachim Insurance Ltd. In Tel Aviv that enabled us to expedite this sizeable and complex transaction. We are very fortunate to have such an excellent partnership.
“In fact, all our institutional investors in the U.S., Europe, South America and Israel encourage us to identify and acquire cash-flowing Class A properties in Class A-plus locations in major U.S. growth markets,” explained Dombey. “This allows us to be extremely selective in building our portfolio by capitalizing on opportunities most 10-year-old real estate investment companies cannot touch.”
Gadi Ben-Haim, Head of Real Estate Investments at Harel, said “This is the third transaction we have carried out with Beacon Investment Properties in line with Harel’s strategy of partnering with experienced leading local companies to generate high value for Harel members.”
Lior Mor, Head of Real Estate Investments at Menora Mivtachim Insurance, added, “Our group is proud to joint venture with Beacon Investment Properties and Harel. The acquisition of a prime office building in the Minneapolis market reflects Menora’s general strategy of buying high quality assets across the U.S. while seeking to provide stable returns to our pensioners.”
Inland American Real Estate Trust, Inc., which has owned IDS Center since 2006, said it is selling the office complex to focus its investment portfolio on the lodging, retail and student housing segments.
“The IDS Center performed well in our portfolio,” said Jeff Manno, vice president of transactions, Inland American Business Manager and Advisor, Inc. “The decision to sell this fine asset is consistent with the execution of our long term strategy.”
The seller was represented by senior managing directors Jamie Fink and Jeff Bramson and director Mark Katz of the Chicago office of HFF, a national real estate capital intermediary. “IDS Center is more than a landmark. It is the centerpiece of downtown Minneapolis,” Fink said. Its desirability is proven by the fact that more than 30 tenants have occupied the building for over 20 years.
“There was very strong interest in the property from international and national investors. IDS Center offers an investor the rare occasion to acquire an office tower that has a perfect location, efficient floor plates, superior amenities, renowned architecture and unobstructed views in a major metropolitan city,” Fink added. “Beacon was selected to bid because of its excellent reputation for closing large real estate acquisitions. They are very efficient and performed as promised.”
Susan Hill, senior managing director and associate director Kelly Layne in HFF’s Houston office and managing director Timothy Joyce in HFF’s Chicago office, arranged the financing, securing a 10-year $182 million financing through JP Morgan Chase Bank. NA.
Originally built as the corporate headquarters for American Express-owned Investors Diversified Services, now independent and known as Ameriprise, the 57-story tower gained national recognition in the 1970s when it was featured weekly on the “Mary Tyler Moore Show.” The actress-comedienne played Mary Richards, a 30-year-old bachelorette and associate producer on the nightly six-o-clock news for mythical WJM-TV that had its studio “located” in the skyscraper. The sitcom’s opening sequence, showing a gleeful Mary throwing her beret in the air, is memorialized on Nicollet Mall with a bronze statue of the star doing her celebrated hat toss.
Today, IDS Center is the prime downtown Minneapolis attraction for businesspeople, shoppers, restaurant goers, visitors and locals just looking for some park-like serenity. Minneapolis-headquartered professional services companies occupy approximately 50% of the office tower. They include the law firms of Lindquist & Vennum; Merchant & Gould; Briggs and Morgan; the Minneapolis office of New York City-based law firm of Fulbright & Jaworski; the law firm of Gray, Plant, Mooty, Moot & Bennett and Hays Companies, risk management consultants and insurance brokers.
Other regional and nationally known companies include Nuveen Investments; Okabena Company, Okabena Investment Services, Mattel, Kraft Foods Group, Nickelodeon-MTV, Norwest Equity Partners, Sit Investment Associates, Wells Fargo Advisors, Wells Fargo Bank and Bank of America.
Jim Durda, vice president of IDS Center who has been its general manager for the last 10 of his 19 years at the property, contends the building is particularly popular with professional service firms because of Philip Johnson’s innovative architectural style. “Mr. Johnson utilized a design technique he called ‘zogs’’ that essentially created 32 private corner offices on every floor,” Durda said. “Couple that with the tower’s panoramic views, location and image and it’s easy to see why we have one of the highest commercial tenant retention ratios in Minneapolis.”
Four glass-enclosed pedestrian skyways link the complex to surrounding buildings and retailers including Macy’s and Off Saks department stores. Within the Center, the ground floor and the skyway level is devoted to a variety of shops, restaurants and services including Banana Republic. GAP, GAP Kids, Hubert W. White, a fine menswear shop, hair stylist Rocco Altobelli, Mission American Kitchen and Bar, People’s Organic Café, Cosi’s, plus Starbucks and a full-service FedEx/Kinko store.
While the Center has 655 indoor parking spaces, business travelers meeting with firms in the office tower do not have to rent a car or hail a cab. On the corner of 7th and Marquette and part of Nicollet Mall is the 19-story, 280-room, four-diamond rated- Marquette Hotel managed by Hilton Hotels Corp. Its main restaurant, Basil’s, is a favorite gathering spot for visitors and people working in the offices. And although it is physically located in the mall and a one minute walk to the tower elevators, the hotel is separately owned and was not acquired by Beacon Investment Properties.
However, Beacon did acquire the 25,000 square-foot indoor park and fountain known as Crystal Court in the center of the complex. The eight- story high enclosed atrium has 18 olive trees housed in planters surrounded by 72 benches and anchored by a digital clock tower that displays time, temperature, traffic information and sports scores.
“Imagine, this soothing fountain with trees that are green year around and plenty of seating where you can relax, meet a friend, read a book, have a sandwich or just think,” said Durda. “It’s this calming oasis right in the middle of a busy city.”
Beacon Investment Properties’ purchase of IDS Center is its largest acquisition to date, its first property in the northern U.S. and its third acquisition in 2013. In the last six months, Beacon has acquired 3.1 million square feet of top-tier commercial real estate, primarily in Texas, Florida and the southeast...
About Beacon Investment Properties, LLC
Beacon Investment Properties, LLC is a 10-year-old full-service commercial real estate investment manager and operator that aims to provide superior returns to its U.S. and international and institutional investors led by Harel Insurance investments & Financial Services Ltd and Menora Mivtachim Insurance Ltd of Tel Aviv. Beacon has acquired 3.1 million square feet of top-tier commercial properties in the last six months. Its affiliate, Beacon Real Estate Services (BRES), provides cost-efficient property management services with an owner’s mindset and manages more than six million square feet of high-quality commercial properties. Beacon Investment Properties focus on acquiring Class A and Class B commercial properties in Class A locations in premier submarkets across the largest and fastest growing metropolitan markets in the Southwest, Southeast and now Midwest. It is headquartered in Hallandale Beach, FL with offices in Houston, Dallas and Atlanta. For further information visit www.beaconri.com.
About Harel Insurance and Finance Group
Harel Insurance Investments & Financial Services Ltd. is one of Israel's largest insurance and finance groups, providing comprehensive financial and insurance solutions, including life insurance, general insurance, health insurance, provident funds, pension funds, mutual funds, ETFs, investment portfolio management, etc. Harel is Israel’s second largest insurance group, with a market share of 20%. In size, the Group is Israel's largest in health insurance, the third largest in non-life insurance and the fourth largest (in terms of premiums) in life insurance. Assets managed by the Harel Group totaled NIS 119.1 billion ($31 billion) at the end of 2012. The shares of Harel Insurance Investments and Financial Services Ltd. are traded on the Tel-Aviv Stock Exchange and are currently included in the TA-100 Index. The deal joins an increasing number of real estate transactions by the Harel Insurance and Finance Group in the USA. In the recent years, Harel has acquired a commercial property on Park Avenue, Manhattan, New York, office buildings in Houston, Texas, residential buildings in Manhattan, New Jersey and Connecticut, and a commercial property in the heart of the Madison Avenue shopping street, on the Upper East Side of Manhattan. In addition, Harel is building, two student housing buildings in Downtown Manhattan, which are rented out to Pace University for a period of 30 years. For further information please visit: http://www.harel-group.com/.
About Menora Mivtachim Group
Menora Mivtachim Group specializes in managing financial assets, pensions and providing a variety of insurance solutions. The group manages assets of approximately 95 billion NIS (approximately $26 billion USD). Menora Mivtachin Group offers a selection of insurance policies in the area of life insurance, health and general insurance as well as new pension funds, investment portfolios, managing advanced financial products. Menora holds full ownership of Israel’s biggest pension fund, “New Mivtachim,” which manages assets worth about 50 billion NIS (approximately 128 billion USD). Since founded in 1935, Menopra has established itself as a reliable, stable and creative company while being on the top tier of companies with the highest returns in the insurance business. During 2009, Menora started acquiring assets in Western Europe followed by a first step into the U.S. market in 2010. Since then, Menora has acquired office buildings in New York, New Jersey and Texas plus retail assets and thousands of multifamily units across the U.S.
About Inland American Real Estate Trust, Inc.
Inland American Real Estate Trust, Inc. focuses on acquiring and developing a diversified portfolio of commercial real estate located in the United States. The company also invests in joint ventures, development projects, real estate loans and marketable securities. As of December 31, 2012 Inland American owned, directly or indirectly through joint ventures in which it has a controlling interest, 794 properties, representing approximately 46 million square feet of retail, industrial and office properties, 5,311 conventional multi-family units, 5,212 student housing beds and 16,345 lodging rooms. Inland American is one of six REITs that are, or have been, sponsored by affiliates of The Inland Real Estate Group of Companies, Inc. For further information regarding Inland American, please refer to the company website at www.inlandamerican.com.
HFF (Holiday Fernoglio Fowler, L.P.) and HFFS (HFF Securities, L.P.) are owned by HFF, Inc. (NYSE:HF). HFF operates out of 21 offices nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. commercial real estate industry. HFF together with its affiliate HFFS offers clients a fully integrated national capital markets platform including debt placement, investment sales, equity placement, advisory services, loan sales and commercial loan servicing. www.hfflp.com.