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CHICAGO-Jackson, MS-based Parkway Properties, Inc. has closed on its $173.5-million purchase of 233 N. Michigan Ave. The acquisition of the 1.07-million-sf building is the REIT’s first in the market.

Financing was provided by a $106-million fixed-rate, non-recourse mortgage at 7.35% from Deutsche Banc Alex Brown. Parkway Properties had expected to pay 10 basis points more for the mortgage. The rest of the equity will come from a $55-million sale of preferred stock and $14.05 million from the REIT’s existing line of credit.

The office and retail building, which includes four levels of parking, is 89% leased. Internet consulting firm March First, which filed for Chapter 7 bankruptcy protection, holding 13% of the space. Long-term tenants include General Services Administration (189,000 sf), United Healthcare Services (168,000 sf) and Young & Rubicam (120,000 sf).

Parkway has ownership interests in 49 office properties located in 11 states with 8.2 million sf.

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