CHICAGO — Piedmont Office Realty Trust Inc. (NYSE: PDM) has entered into a binding agreement to sell its largest asset, Aon Center, located at 200 E. Randolph St. in downtown Chicago, for $712 million, or $260 per square foot. The buyer is the 601W Cos., a private real estate investment company. The sale is expected to close early in the fourth quarter.
Constructed in 1972, Aon Center is a 2.7 million-square-foot, 83-story office tower that is currently 86 percent leased. Situated on 3.5 acres in Chicago’s East Loop, Aon Center offers views of the city, Lake Michigan and Millennium Park. Last week, Piedmont announced that the Kraft Heinz Co., a global food and beverage giant, will relocate its Chicago headquarters from Northfield, Ill., to five floors of the building.
“The successful sale of Aon Center will be the culmination of Piedmont’s long-term strategy of transforming the asset into one of Chicago’s most prestigious office towers,” says Piedmont president and CEO Donald Miller. “We have been fortunate to attract a number of distinguished tenants to Aon Center such as KPMG, Microsoft, United Health Group, Integrys, the Federal Home Loan Bank of Chicago and, most recently, Kraft Heinz. Additionally, we have also been successful in renewing existing quality tenants such as Aon, JLL, AT&T and Edelman.”
Piedmont’s Ray Owens and Tom Prescott, along with the JLL team of Bruce Miller and Nooshin Felsenthal, facilitated negotiations on behalf of the seller.
“Our regional management team, in partnership with JLL’s leasing team, has worked tirelessly over the last several years to secure and retain a number of blue-chip tenants for the benefit of both Aon Center and the city of Chicago,” says Owens. “Those efforts were rewarded by the level of interest in this transaction, and we are extremely appreciative of JLL’s efforts on our behalf in marketing the property for sale.”
In conjunction with the closing early in the fourth quarter, the company anticipates receiving net sales proceeds of $640 million, net of buyer-assumed lease abatements and $48 million in contractual tenant capital improvements and leasing commissions. Piedmont intends to use the proceeds to enhance its balance sheet through paying down debt and positioning the company to potentially fund strategic acquisitions and/or selective share repurchases, depending upon the opportunities that arise.
Piedmont is an owner, manager, developer and operator of Class A office properties located in select submarkets of major U.S. cities. Its $6 billion portfolio is comprised of 21 million square feet.
PDM’s stock price closed at $18.84 on Tuesday, July 21, down from $19.54 one year ago.
— Haisten Willis