X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

CHICAGO-Parkway Properties Inc. expects to sell the majority interest in its lone Chicago holding, 233 N. Michigan Ave., to a joint venture partner early next year. The Jackson, MS-based REIT acquired the 1.1-million-sf office building in 2001 for $173.5 million, sold a 70% stake to Investcorp International Inc. for $125 million in 2003, then bought back that interest this year for $136 million.

“We are well into the marketing process,” said president and CEO Steven G. Rogers during the REIT’s recent earnings conference call. “I’m pleased with the interest buyers have shown so far. It’s a well-leased, well-located asset that will command attention from the capital markets.”

Despite 91.2% occupancy in the 30-story Illinois Center office building, well ahead of the East Loop submarket, Parkway Properties has nearly $100 million invested there. “We firmly believe it’s in the best interest of our shareholders to diversify the holdings in our portfolio,” Rogers explained, noting the East Loop asset represents 15% of the company’s invested equity capital. Rogers suggested the company expects to stay on as manager and leasing agent for 233 N. Michigan Ave. as well as minority owner.

Parkway Properties’ next joint venture partner will buy a property with little short-term leasing risk. Only 62,000 sf is up for renewal in 2006. However, those 12 leases are at lease rates averaging more than 10% above the market, according to the company’s most recent earnings report. The company predicts net operating income from 233 N. Michigan Ave. will be $18.4 million in 2006.

The most recent deal involving 233 N. Michigan Ave. places the value of the property at $194 million. The REIT will use proceeds from the sale to buy other properties for its own portfolio or Ohio public employees’ pension fund partner.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.