{"id":1004115148,"date":"2015-03-10T06:11:12","date_gmt":"2015-03-10T14:11:12","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004115148"},"modified":"2022-12-08T19:16:23","modified_gmt":"2022-12-09T03:16:23","slug":"blackstone-to-buy-willis-tower","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/blackstone-to-buy-willis-tower\/","title":{"rendered":"Blackstone to Buy Willis Tower?"},"content":{"rendered":"

By Scott Baltic, Contributing Editor\"Willis-tower\"<\/a><\/i><\/p>\n

It\u2019s still early in the year, but maybe Blackstone Group\u2019s global head of real estate, Jonathan Gray, should be thinking about clearing space on his shelf for another award or two. If unconfirmed media reports that Blackstone has a preliminary agreement to buy Chicago\u2019s iconic Willis Tower for nearly $1.5 billion are true, and if the deal goes through, Gray would have to be a strong contender in Commercial Property Executive<\/i>\u2019s peer-voted competition later this year.<\/p>\n

Blackstone acquiring the Willis Tower, from New York\u2019s Joseph Chetrit and Joseph Moinian and American Landmark Properties, of Skokie, Ill., would be the kind of big-ticket transaction that helped win Gray CPE\u2019s Executive of the Year award in 2011, 2012 and 2013 and Investor of the Year in 2011 and 2013.<\/p>\n

The rumored deal, for nearly $400 per square foot, would also bring an outsized profit for the sellers, who in 2004 paid $840 million for the iconic building, then still named the Sears Tower.<\/p>\n

The Chicago office of Eastdil Secured, which is marketing the Willis Tower on behalf of its owners, did not return Commercial Property Executive<\/i>\u2019s call seeking information on the situation.<\/p>\n

A report from Crain\u2019s Chicago Business noted that one factor in the rumored high-dollar value on the sale would likely be the tower\u2019s substantial revenues from the 103rd-floor skydeck (more than $25 million a year) and from broadcast space and antennas (more than $10 million a year). Those income streams presumably would help balance out the current lackluster 84 percent occupancy of the building\u2019s nearly 3.8 million square feet of office space.<\/p>\n

Considering just buildings in the top quartile of assets, cap rates for sales of downtown Chicago buildings pre-recession showed a typical spread of 30-some basis points versus sales of similar assets in the United States overall, Jim Costello, senior vice president at Real Capital Analytics, told CPE<\/i>. But after widening to 100 basis points and more in late 2012, that spread by late 2014 had fallen to just 49, according to figures from RCA.<\/p>\n

In some respects, Costello commented, higher prices and lower cap rates in the Chicago CBD now fit \u201ca pattern of capital \u2018rediscovering\u2019 Chicago and moving back toward longer-term relationships.\u201d<\/p>\n

Since 2001, according to Real Capital Analytics, there have been just 23 single-asset sales of U.S. CRE that have topped $1 billion, and all but three have been in New York City. Those three were:<\/p>\n