Bridge Development Lands $800 Million Capital Partner

 

Backed by two new investors out of Dallas, Chicago-based Bridge Development Partners LLC is ready to take on a Texas-sized list of industrial projects.

Dallas-based Hunt Realty Investments Inc. has agreed to an initial investment of about $800 million as it becomes a new capital partner of the firm, Bridge Principal Steven Poulos confirmed.

Meanwhile, Bridge has closed on an anticipated joint venture with Dallas-based Hillwood Development Co. in which it will become the majority investor in two spec warehouses — industrial buildings without leases signed in advance, or on speculation — and three recently acquired warehouses in the Chicago area.

Mr. Poulos declined to specify the amount Hillwood is investing but said the Dallas firm will be the majority partner in the venture. The total value of those five deals is about $80 million, with the partners planning additional projects in Chicago and the Miami area, Mr. Poulos said. Hillwood is part of the Perot Group, which is managed by Ross Perot Jr., son of the former presidential candidate.

With two powerful new backers, Bridge will complete $150 million to $200 million in transactions a year in Chicago and South Florida before pushing into other markets within a few years, Mr. Poulos said.

A Hillwood representative declined to comment but confirmed the joint venture. A Hunt representative declined to comment.

The deals come amid a four-year low for industrial vacancy in the Chicago area, which is causing money to flow freely from investors interested in that property type, said industrial broker Vernon Schultz, an executive vice president in the Rosemont office of Colliers International.

“There's a lot of capital chasing deals,” Mr. Schultz said. “For a good development partner like Bridge, there's a lot of investors standing in line to give you money.

“The last two years it's ramped up, and right now it's at a fever pitch. Going back 24 to 48 months, it was pretty tough.”

That dry spell, created when retailers, manufacturers and other businesses that store or make products in industrial buildings hit hard times amid reduced consumer spending, led Bridge to become more aggressive with its growth.

“Being an undercapitalized entrepreneurial real estate company wasn't that much fun in those times,” Mr. Poulos said. “We decided capital wasn't going to be an issue in the future. We wanted to find partners to support our company and help with our growth.”

An affiliate of Elgin-based Wanxiang Real Estate Group LLC, the U.S. real estate unit of Chinese auto parts manufacturer Wanxiang Group Corp., partnered with Bridge to acquire the five properties in which Hillwood is taking a large stake.

Those include two outdated structures in Elk Grove Village, near O'Hare International Airport, that will be replaced with spec buildings of 150,200 and 123,840 square feet. Also in the portfolio are soon-to-be-vacant warehouses of 109,066 and 86,135 square feet in Vernon Hills and Addison that will require re-leasing, and a 313,899-square-foot cold storage facility in Lyons.

In an unrelated deal, Bridge also confirmed the recent $19.8 million acquisition of a 319,043-square-foot warehouse at 2700 Alft Lane in Elgin, along with an adjacent 10-acre site where it plans to complete a 225,000-square-foot spec warehouse by the end of 2013. The existing building is 77 percent leased, according to Bridge.

An executive from Minneapolis-based Ryan Cos., the seller, did not return a call.