Almost five years after buying the financially distressed Block 37 and then building the Loop’s largest apartment tower in decades atop the shopping mall, CIM Group is drawing up a real estate development that could make an even larger impact on Chicago’s skyline.
The Los Angeles-based real estate investment firm, one of the busiest investors in Chicago real estate in recent years, is now mapping out a Tribune Tower redevelopment that is expected to include construction of a new high-rise east of the Michigan Avenue landmark.
It is the latest in a string of major U.S. real estate deals by CIM, which has kept a relatively low profile considering the size of its projects. Those have included the 96-story 432 Park Avenue condominiums building in New York, the tallest residential tower in the Western Hemisphere.
The media-shy firm’s next daring feat is to try to convert the 89-year-old Tribune Tower’s office space and a parking lot into a mix of uses likely to include hotel rooms, residences and retail along the Magnificent Mile.
“It’s complicated and messy and urban, and that’s right up their alley,” says retail broker David Stone, who formerly represented CIM on Block 37 leasing. “It will be a very delicate project to knit together.”
CIM’s founders, who include former Israeli soldiers Avi Shemesh and Shaul Kuba, are sure to have their resolve tested on property just north of the Chicago River.
CIM’s success could largely depend on the type of zoning it can obtain from the city for new construction. That process goes through Ald. Brendan Reilly, 42nd, who has already publicly voiced concerns about some potential aspects of the project, including any efforts to build new retail space on the courtyard south of the tower. Another unknown is how tall CIM will be allowed to make a planned second tower.
Specific details of CIM’s plans are unknown, and the firm’s founders decline to be interviewed for this story.
After arriving in the United States, Shemesh and Kuba were California landscapers when they met the third founder, Richard Ressler, while trying to get hired to work on Ressler’s yard. The chance meeting led to the firm’s eventual founding in 1994.
CIM—no one knows what the acronym stands for—started off by focusing on Los Angeles-area projects but later rose to national prominence by swooping into New York to buy several high-profile buildings out o
f financial distress. That included the former Drake Hotel, where 432 Park Avenue now stands, and the Trump Soho hotel and condo building. (Republican presidential nominee Donald Trump’s company licensed the name, and marketed and operated the building, but was not its developer.)
“They’re very creative and tenacious in their dealmaking,” says Stephen Livaditis, a Chicago-based senior managing director at Eastdil Secured, the firm that advised the Block 37 and Tribune Tower sellers, and has completed deals with CIM in other cities. “They’ve tackled incredibly complex and high-reward transactions from New York to LA, which came with risks others were unwilling to take.”
CIM’s assets under management have swelled to about $20 billion, and its funds are backed by major institutional investors such as the California Public Employees’ Retirement System.
“They’re intense,” says Stone, founder of Chicago-based Stone Real Estate. “They’re fearless, and will take on projects that others find too complex or too hairy. They will take on large, mixed-use projects that others shy away from, which makes them unusual. Most institutional buyers aren’t willing to take any risk.”
CIM has filled much of the Block 37 retail space that languished for years, including deals for the Latinicity food emporium and an AMC movie theater on hard-to-lease upper floors.
CIM also has bought two downtown office buildings and recently completed an apartment tower in the South Loop, where it is set to kick off construction of another by early next year.
“They’re very nimble, and they seem to know what they can or can’t do,” says Michael Newman, CEO of Chicago-based Golub, CIM’s partner on most of its Chicago deals. “The proof is in the pudding, because they deliver.”
CIM’s willingness to dive into years-long projects stems from a depth of real estate expertise within CIM’s offices, which allows CIM to thoroughly analyze potential deals, according to people familiar with the company.
“They keep watch on numerous projects at any given time,” says developer John Murphy, chairman and CEO of Chicago-based Murphy Development Group, CIM’s partner on a planned 47-story, 500-unit apartment tower in the South Loop. “Once they see something that fits their criteria, they are very quick to step up to the opportunity. When I put this deal under control, they responded immediately.”
CIM is also “extremely hands-on” with its properties, Stone says. He concedes that rubs some brokers the wrong way, but adds: “It made us better at what we do, because we had to raise the level of our game.”