Flip and Mayor
Daley - courtesy Chicago TribuneAn executive of Divine's real estate subsidiary, DotSpot
Inc., confirmed Friday the newly public company
recently completed its purchase of 7½ acres of industrial
land at the northern tip of Goose Island, about 12
blocks north of downtown.
The purchase, for about $12 million, from a partnership
that included Divine's founder and CEO, Andrew "Flip"
Filipowski, keeps the company's options open while the
year-old Internet incubator—conceived at the height of
dot-com stock euphoria—wrestles with strategies to
survive in a more skeptical market.
Divine's stock has been trading around $8 a share,
below its $9 initial public offering price on July 12.
Plans for Goose Island have been on hold at least since
April, when the tech stock collapse contributed to
repeated delays in Divine's public offering.
"Our entire effort was directed to the IPO," said
DotSpot chief operating officer and general counsel
Louis Cohen. "Now that we've (purchased) the land, it's
one of our primary orders of business."
When conceived a year ago by Filipowski with two
partners—real estate developer W. Harris Smith and
David Kahnweiler, president of Rosemont-based
Colliers Bennett & Kahnweiler—the project was
envisioned as a 400,000-square-foot high-tech campus,
with community facilities including a digital museum,
schoolhouse and a parking garage.
Cohen said the real estate firm is preparing several
scenarios to present to Divine's senior executives and
board, including a phased development that would start
with 200,000 square feet of space for start-ups and
Divine senior executives.
Kahnweiler and Smith controlled the land, which is the
site of a former Klemp Corp. metal-grate factory and
warehouse. They formed a partnership in which
Filipowski had a 33 percent stake, with the intent of
developing a facility that Divine would lease.
But Divine had an option to buy the land from the
partnership for $9.75 million plus associated costs such
as land clearance for a total of about $12 million,
according to Divine's filings with securities regulators. A
July 31 deadline associated with the option prompted
Divine's purchase.
The purchase gives Divine control in deciding whether to
jointly develop and own the facility or sell to a developer
and become a tenant.
Said Cohen, "There are all kinds of possibilities including
a sale and leaseback."
Real estate sources said Divine had explored for months
alternatives to the Goose Island site, including the former
Montgomery Ward complex on Chicago Avenue, as
well as Loop locations.
Divine's offices are scattered from leased space on
North Elston Avenue to suburban Lisle, where many
corporate functions are housed.
The decision to develop space on Goose Island was
driven by Mayor Richard Daley's pledge last year to
provide as much as $14 million in tax increment financing
for that site, sources said.
"They pushed hard and got some fairly significant
entitlements," a source said. "They wouldn't have closed
on that option if it didn't make financial sense."