By Gail Kalinoski
Chicago—Tribune Media Co. continues to sell off its commercial real estate assets. The latest is its headquarters—the iconic Tribune Tower at 435 N. Michigan Ave. in Chicago. Tribune and CIM Group, which has been expanding its footprint in the city, have agreed to shake hands for approximately $240 million.
The agreement calls for Los Angeles-based CIM Group to pay $205 million in cash at closing and an additional payment of up to $35 million if certain conditions are met, for a total of $240 million, according to both companies. The sale is expected to close in the third quarter. In addition to the 35-story, nearly 740,000-square-foot building, the purchase includes a 36,000-square-foot development site located directly east of the Tribune Tower, fronting Cityfront Plaza.
“Tribune Tower has been a unique part of Chicago’s skyline since the 1920s. It is a gem of architectural and structural accomplishment and a constant reminder of the important role that Tribune has played in the development of the city itself,” Peter Liguori, Tribune Media president & CEO, said in a prepared statement. “Nonetheless, monetizing the significant assets of Tribune Media’s real estate portfolio is a strategic priority for the company and we are extremely pleased with the outcome of this sales process. Importantly, we’re achieving prices consistent with the $1 billion valuation of our portfolio.”
Since the beginning of the year, Tribune Media has sold several smaller properties around the U.S. for gross proceeds of roughly $89 million. The company also said it had previously announced agreements to sell the north block of the Los Angeles Times Square property and nearby Olympic printing plant. Those sales in Los Angeles are expected to also close in the third quarter.
Tribune Media hired Eastdil Secured nearly one year ago to explore a sale or a partnership to redevelop the neo-Gothic tower built in 1925, according to the Chicago Tribune. The newspaper noted that the 3-acre property is zoned for up to 2.4 million square feet of development and that Tribune Media itself had drawn up plans to possibly redevelop the site with residential, retail and a hotel.
Two years ago, Tribune Media spun off its publishing division, which included the Chicago Tribune, Los Angeles Times and other newspapers and is now known as Tronc. Tribune Media kept the broadcasting business and real estate portfolio, according to the Tribune. In a note to employees, Liguori said Tribune Media will probably move out of the building in 2017 “as the buyer intends to repurpose the Tower.” The newspaper noted its lease at the Tower doesn’t expire until 2018 and isn’t expected to leave early.
CIM Group did not reveal its intentions for the property but noted that it is “in an area that, today, is attracting new businesses and restaurants” and referred to its own recent acquisitions in the city.
“After being active in the Chicago market for more than a decade, we have recently made several compelling investments that have expanded our growing presence in the city,” Avi Shemesh, co-founder & principal of CIM Group, said in prepared remarks in the joint release with Tribune Media.
An owner and manager of historic properties, CIM Group said it works to maintain the historical integrity of its assets by refurbishing and repositioning to maintain integrity and “overall vibrancy and value within a given community.”
One of its most recent purchases in Chicago was Four40, an office tower at 440 LaSalle St. in the Central Loop area that it acquired from Tier REIT Inc. for $191 million in June. The property, which consists of a 954,000-square-foot tower and an 83,000-square-foot annex, is home to the Chicago Stock Exchange, Associated Press and Commonwealth Edison, as well as a private social and athletic club and 21-key hotel.
The firm, which has owned the Block 37 shopping, dining and entertainment complex in the Loop for several years, recently completed construction of the 690-unit Marquee at Block 37 apartment tower at 108 N. State St. It also has an ownership interest in a 290,000-square-foot office condominium at 625 N. Michigan.