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Rubloff Inc. has ventured into the future of Chicago real estate development, and it works.
Weeks after Orient Leasing Co. of Tokyo acquired a 23% stake in the Chicago-based real estate firm, the two partners produced development plans and financing for a 750,000-square-foot office building at 100 N. Riverside.
The quickly consummated deal was a model joint venture between American and Japanese firms. The Japanese company provided debt and equity financing, while a prestige American firm delivered plans and an anchor tenant, Illinois Bell, to assure significant upfront cash flow and security for the equity investment.
The Rubloff-Orient Leasing venture typifies the American-Japanese real estate deals that can be expected in Chicago in the near future. Big-name real estate companies here are traveling to Tokyo almost monthly in efforts to line up financing for what is expected to be Chicago's next office building construction boom in the early 1990s.
"Tokyo is becoming a center of American real estate dealmaking," says John Oharenko, vice-president at Cushman & Wakefield of Illinois Inc.
The stakes are high. The coming wave of Japanese investment promises to add new office, retail and hotel facilities to Chicago's already robust skyline, which will continue to fill out in areas east of Michigan Avenue and in the West Loop.
The new money also will provide development and real estate service opportunities for some of the city's most reputable firms. Since 1985, local and Japanese real estate interests have teamed up on more than a dozen deals with a value approaching nearly $2 billion.
"The Japanese generally think in the long term," says John West, senior vice-president of Balcor Co. of Skokie. "In industry, they look first and foremost to obtain marketshare regardless of cost. In real estate, it's no different."
Balcor Co. has positioned itself to tap into Japanese interest in real estate here by packaging U.S. properties for its Japanese partners: C. Itoh Co. Ltd., Misawa Homes Co. Ltd. and Orient Finance Co. Ltd. With the Japanese yen having appreciated at a rate of nearly 40% to the dollar last year and with the stock market crash having chilled many foreign investors on U.S. equities, real estate investment appears a likely favorite in 1988 and beyond.
"The stock market crash will...