Hyatt Center under contract for $625 million
Hyatt Center, 71 S. Wacker Drive. Photo from CoStar Group Inc.
(Crain's) — A Southern California real estate firm has a contract to buy the Hyatt Center from the Pritzker family for about $625 million, people familiar with the transaction confirmed Tuesday night.
Irvine Cos., whose chairman is longtime developer Donald Bren, has agreed to buy the curving, 49-story trophy tower at 71 S. Wacker Drive in a deal expected to close in less than 10 days.
The price, about $419 per square foot, surpasses expectations set in August, when Pritzker Realty Group LLC put the nearly 1.5-million-square-foot skyscraper on the market. At the time, the price was predicted to be about $390 a square foot.
Related story: Pritzkers hope to fetch $575 million for Hyatt Center
But sales of office buildings nationwide were up 124% in October, to $2.1 billion, compared to October 2009, according to a Nov. 18 report by New York real estate research firm Real Capital Analytics Inc. Investor demand is particularly strong for top-quality, downtown office buildings, which is helping push up prices.
“Office investors' focus on visible assets in major markets has resulted in stronger price pressures,” the report says.
At $625 million, Irvine is likely to have a first-year return, or capitalization rate, that could be as low as 6.1%.
Hyatt Center was developed in 2005 by Pritzker Realty, whose chairman and CEO is Penny Pritzker.
The building has a star-studded roster of tenants, such as law firm giant Mayer Brown LLP, the Pritzker family's Hyatt Hotels Corp. and New York investment bank Goldman Sachs Group Inc.
In addition to heading up the Pritzker family's real estate operation, Ms. Pritzker is also chairman of Vi, the senior living division of Hyatt. A Vi spokeswoman did not return messages requesting comment Tuesday night. Pritzker Realty's offices were closed.
The purchase by Irvine is believed to be the company's first outside California, where Mr. Bren has been a key figure in real estate for decades.
The company, which has been called the largest property owner in Orange County, Calif., owns apartment complexes, retail centers and resorts as well as office buildings.
A spokeswoman for Irvine did not return messages requesting comment.
