Parkway Properties, Inc. has announced that it is under contract to sell 111 East Wacker Drive for a gross sale price of $150.6 million.
111 East Wacker is a 1-million-square-foot office property located in the central business district of Chicago and was 94.8 percent occupied as of September 1, 2011. The Property currently serves as collateral for a $148.5 million non-recourse mortgage loan with a fixed interest rate of 6.3 percent and maturity date in July 2016. The buyer has concluded its due diligence and the sale is expected to close during the fourth quarter of 2011, subject to the buyer’s successful modification and assumption of the existing mortgage loan and customary closing conditions. Upon the sale of 111 East Wacker, Parkway will have a partial interest in two remaining assets located in suburban Chicago totaling 815,000 square feet, both of which are owned by Parkway Properties Office Fund, L.P. (“Fund I”).
In a statement, Steven G. Rogers, president and CEO of Parkway said , “In addition to the strategic benefit of narrowing our operational focus, we expect this sale to produce a number of financial benefits. Specifically, the sale of this property will remove the single largest mortgage loan from our balance sheet, significantly reducing our leverage. Also, approximately one third of the square footage at the building is expected to be vacated over the next 12 months, though these expirations have been partially backfilled with a previously announced 135,000 square foot lease. Given the required re-leasing of the property, this sale should result in meaningful capital cost savings over the next couple of years. Those savings should have a materially positive impact on Parkway’s projected cash flow and funds available for distribution over that period.”
The company stated that it could take a non-cash impairment loss of approximately $18 to $20 million in the third quarter of 2011, depending on the ultimate timing of the sale.
Earlier this year, Parkway sold 233 N. Michigan, a 1.1-million-square-foot office building, to CommonWealth REIT for $162 million.
