To: neverenough who wrote ( 122) 8/6/2000 1:32:43 PM From: Glenn Petersen Read Replies (1) | Respond to of 246 The DVIN quiet period ends Monday. They have also closed on the Goose Island site: chicagotribune.com Divine closes deal on Goose Island site Development's scope unclear as tech firm reviews options By Barbara Rose and Thomas A. Corfman Tribune Staff Writers August 5, 2000 Divine Interventures Inc. has bought the land on which it planned to build a $60 million showcase headquarters, though the long-anticipated, city-backed project is almost certain to be scaled back. An 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."