The Chicago-based JMB owned a one-third interest in 1001 Fannin St., but was forced to exercise a first right of refusal to keep the balance of the class A office building from being sold to Parkway Properties Inc. of Jackson, MS, Mike Hassler, first vice president with CB Richard Ellis Inc. in Houston, tells GlobeSt.com. Parkway was selected from a field of eight after a nationwide marketing campaign produced 166 potential buyers for majority ownership in the 25-year-old office building.
JMB waited until the 11th hour of a 30-day period to close the deal, which involved the assumption of an $85-million note held by TIAA-CREF of New York City. The tower's majority owner, First City Liquidating Trust, ordered the tower, long a centerpiece of controversy, to be sold by year's end. Hassler and CBRE senior vice president Thomas G. Bousquet Jr. handled the sale.
Hassler says all would-be buyers were concerned that JMB would step up to the plate so a breakaway clause was negotiated to offset costs incurred by anyone in line to take over the trust's two-thirds interest. He won't divulge the amount, but did say JMB paid "out of its pocket" all due diligence costs and the breakaway fee to sever Parkway's contract.
The liquidating company was set up in 1994 to hawk the assets of First City Banking of Texas, which held the ground lease and a 350,000-sf master office lease for the high-rise. JMB got its one-third stake in 1986 from Aetna shortly after the insurance company took over the tower's development company, Urban Investment & Development Co. of Chicago.
The liquidating trust is led by Robert Brown, president, and Jerry Thompson, vice president, who along with bank shareholders sued the FDIC after it closed First City Bank Oct. 30, 1991. The group claimed the bank had the wherewithal to remain open. Hassler says the litigants received a large financial award and all unsold bank assets, including the First City Tower stake. Hassler says the trust has been wildly successful over the years, earning enormous returns on asset sales for shareholders.
First City Tower was 95% occupied at sale time. Its lead tenant is the Houston-based law firm of Vinson & Elkins, which occupies about 455,000 sf.
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