Trizec Properties was scheduled to convert its second mortgage on the 3.5-million-sf tower at 233 S. Wacker Dr. into an ownership position on Jan. 2, 2003, but a Sears Roebuck & Co. subsidiary still has not completed necessary documentation, Callahan reports during an earnings conference call.

"We expect this could happen in the next couple months but we're reluctant to make a more specific forecast than that because it's really out of our hands," he says. "There's a documentation process that we're not part of."

Meanwhile, Trizec Properties continues to earn $2 million to $4 million a year in management and leasing fees while the documentation process drags on, but also is talking to the first-mortgage holder. Metropolitan Life's mortgage is about $770 million, while the most recent appraisal came in at $826 million, reflecting a softening West Loop office market that has helped cut occupancy at Sears Tower under 90%.

"Our position continues to be, in order to make ownership of the property financially viable, we really do need long-term modification of the terms of the existing non-recourse first mortgage," Callahan says. "Without that assurance, we're just going to have to reassess our ownership position over time."

That could take up to two years, as Metropolitan Life's mortgage comes due in 2005. "It's out our hands," Callahan says. "We don't anticipate it will take that long, but it could."

Trizec Properties already carries nearly $3.2 billion in debt on its balance sheet, which according to its first-quarter financial report, adds up to 63% of the REIT's book value.