CHICAGO — Jackson, Miss.-based Parkway Properties has closed on the sale of 233 North Michigan, a 1.1 million-square-foot office tower located in Chicago's central business district, for $162.2 million. The property traded at a 6.9 percent capitalization rate. Occupancy for the building was 83.8 percent at the time of closing. According to reports, the buyer in the deal was Newton, Mass.-based CommonWealth REIT.
Parkway plans to use the proceeds of the sale to pay down existing debt. The company will repay the $84.6 million first mortgage for the property, which would have matured in July. The company also plans to use the net proceeds following this repayment — approximately $74 million — to pay down its revolving credit facility.
“The sale of 233 North Michigan is a strategic decision by Parkway to reduce our exposure in one city block of the Chicago CBD while also using the expected significant proceeds to improve our balance sheet,” said Steven Rogers, president and CEO of Parkway, in a statement. “We like the Chicago market and will continue to manage and own assets in the area, but the sale of this particular asset enables us to accelerate the achievement of the capital allocation objectives of our FOCUS plan.”
— Coleman Wood