Parkway acquired the 1850 N. Central Ave. asset in 2002 for $58 million. A year later, the New York City-based Investcorp bought a 70% stake in the deal for $42 million.Parkway and Investcorp went into the deal as long-term holders, but the hot Phoenix market provided a strong incentive to sell the asset. "Based on the returns that had been experienced in this market and other opportunities for capital, Investcorp decided it was a good time to liquidate the asset," William Flatt, CFO for the Jackson, MS-based REIT, tells GlobeSt.com. "We agreed and we're following their lead."

Flatt explained that improvements to the trophy real estate during the Parkway-Investcorp ownership were more operational and leasing rather than any physical upgrades. "It's a beautiful building," he adds. "It's probably one of the nicest buildings in Arizona and it's not something that would likely be built again today."

Chris Toci with Cushman & Wakefield of Arizona Inc. says the buyer had to be approved by Standard & Poor's, Moody's and Fitch rating services. "For a conduit loan assumption, it was at light-speed," he says. The JV buyer assumed a $50-million, interest-only loan held by Bear Stearns Inc., according to Toci, who teamed with C&W's Brian Ackerman and Ted Harrison to run the sale for the Parkway-Investcorp partnership.

In a release about the hand-off, Parkway reported it will receive $15.5 million of net cash proceeds and post a $13.1-million gain for the sale in the second quarter. During the hold, Parkway received additional management fees of about $355,000 and a $3.9-million incentive fee. Parkway's share of the loan transfer totaled about $225,000, which along with $100,000 of unamortized cost will be included in Q2 expenses.

The now 90%-leased landmark was built in 1991 as Dial Corp.'s headquarters, but a split with affiliate Viad put a new name on the tower and Dial's space on the sublease market when it relocated to Scottsdale. Dial's sublease space was set to roll back to the owner this year. "Between new and sublease customers rolling into regular leases, much of that roll has been mitigated," Flatt says.

The C&W team of Jerry Jacobs and Larry Downey had been leasing the asset. The new plan puts Trammell Crow Co. into the leasing seat and the first-time Phoenix buyer, McCarthy Cook, into the management role, Toci says.

The final price affirms what the brokerage community projected for Midtown. "We've seen an interesting story unfold in the Camelback Corridor," Toci says, "and our theory was that same story would unfold in Midtown." When the dust settled on the deal, Viad Corporate Center delivered a record-breaking price for the seller. Until now, Phoenix Plaza, also a North Central Avenue property, was the costliest real estate, trading in November 2004 for $148 per sf.

The Viad offering sparked three bidding rounds. Toci says the brokers put out 176 books and conducted 33 tours in a whirlwind 45-day turn from Viad Corporate Center's market debut until the buyer was selected. "We didn't expect 33 tours," he says.