Parkway to Sell 1 MSF Building for $162.2M

May 9, 2011
By Barbra Murray, Contributing Editor

Courtesy Flickr Creative Commons user Vincent Desjardins

Parkway Properties Inc.’s portfolio will soon wave goodbye to the Chicago office building at 233 N. Michigan Ave., now that the REIT has entered into an agreement to sell the 1.1 million-square foot asset for $162.2 million.

Parkway came into possession of 233 N. Michigan in 2001, when the company shelled out $173.5 million in cash for the 32-story tower. In 2002, the REIT sold a 70 percent interest in the building to Investcorp International Inc. for $125 million. Three years later, Parkway bought back Investcorp’s stake a deal that valued the property at $194.3 million.

Designed by Mies van der Rohe, the building first opened its doors in 1972, and underwent a comprehensive renovation in 1999. In addition to approximately 983,000 square feet of Class A office space, 233 N. Michigan features a 41,000 square-foot retail concourse, 43,000 square feet of storage space and a four-level below-grade parking facility. Names on the 83.8 percent full tenant roster include the U.S. Department of Health and Human Services, which occupies about 190,000 square feet.

Once Parkway has proceeds from the sale of 233 N. Michigan in hand, the REIT will pay off the $84.6 million first mortgage on the property and use the remaining total of approximately $75.5 million to reduce amounts outstanding under its credit facility. Parkway has already pocketed a $17 million non-refundable earnest deposit from the buyer. The transaction is on track to close before June 2011.