CHICAGO-Newton, MA-based CommonWealth REIT, formerly known as HRPT Properties, has agreed to purchase the 233 N. Michigan tower for $162.2 million here. Jackson, MS-based Parkway Properties Inc. is selling the 32-story, 84%-occupied building.
Parkway said in a statement that the cap rate for the sale of the 1.1-million-square-foot building was 6.9%. Commonwealth, through its subsidiary HUB Properties Trust, provided a non-refundable $17 million earnest deposit for the sale.
The tower includes tenants such as Motorola, United Health, Clear Channel, Young & Rubicam Inc. and US government offices. Asking rates are $15 per square foot, according to the owner. The building was designed by architect Mies van der Rohe and built in 1972, and includes a retail concourse and a shared 1,000-car heated parking garage.
The seller plans to repay an $84.6 million first mortgage. Parkway said it estimates it will recognize a gain on the sale of about $2.6 million in the second quarter. The company purchased the tower for $172 million in 2001, sold a 70% joint venture interest to New York City-based Investcorp International Inc. for $125 million in 2003 and then bought back the interest for nearly $140 million in 2005.
Steven Rogers, president and CEO of Parkway, said in a statement that the firm, which also geographically focuses on the Southeast and Southwest, still plans to own properties in the Chicago market. “The sale…is a strategic decision by Parkway to reduce our exposure in one city block of the Chicago CBD while also using the expected significant proceeds to improve our balance sheet,” Rogers said in the statement. The company also owns 111 E. Wacker nearby, Chatham Centre in Schaumburg, IL and US Cellular Plaza in the O’Hare Airport submarket.
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