Israel’s Clal Insurance Buys Chicago’s Harper Court Office Complex for $112M

Clearly, Clal Insurance is keen on Chicago. The Tel Aviv-based company, one of Israel’s largest financial institutions, made its entrée into the U.S. real estate market with a purchase in Chicago last year and now the company has just completed the acquisition of its second office asset in the country: the $112 million, 225,000-square-foot Harper Court mixed-use office and retail complex in Chicago’s Hyde Park neighborhood.

Clal snapped up the 12-story complex–a segment of the first phase of what will ultimately be a 1.1 million-square-foot mixed-use destination–from the University of Chicago, which had acquired the building for approximately $98 million from its developer, Harper Court Partners, soon after is completion last year. Harper Court started as a public-private endeavor that included the City of Chicago and the University, which contributed land for the project.

Clal’s acquisition includes the commercial building, featuring 150,000 square feet of office space and 75,000 square feet of retail, as well as parking accommodations. But Clal has walked away with more than just square-footage; the company also secured a 20-year master lease for the entire property from the University of Chicago. The lease agreement also gives the University the right to sublease any vacant retail space.

It was an offer Clal couldn’t refuse. “[Harper Court has a] strong guarantor, fixed-income with market rent escalation, new construction, master lease and all risks pass through to the guarantor,” Tamir Kazaz, CEO for Clal US, told Commercial Property Executive.

The Harper Court transaction follows Clal’s first U.S. real estate purchase, a 49 percent stake in the 1.2 million-square-foot One South Wacker office building in the Windy City, by approximately 18 months. Clal purchased the 40-story high-rise in a joint venture with Harbor Group International L.L.C. for $221 million.

However, it’s not all about the office market for Clal. “Multi-family is our core type if investment, as well as long term credit tenant office leases,” Kazaz added.

The company made its first multi-family purchase in the States in March of this year, snapping up the 100-unit Infinity Apartments in Edgewater, N.J., for $48 million in a partnership with Waterton Associates L.L.C.

“We came to the conclusion that multi-family is a more stable business with annual growth that will give us protection against inflation,” Kazaz told CPE’s sister publication, Multi-Housing News, during an interview in June.

Be it multi-family or office, Clal is only getting started in the U.S. The company plans to spend several hundred million dollars on real estate acquisitions over the next few years, training its eye on the New York tri-state region and, of course, Chicago.