REIT puts two Illinois Center towers up for sale

By Eddie Baeb, Oct. 10, 2007

(Crain’s) — Two office towers in the Illinois Center complex are joining the surprisingly crowded for-sale market in the East Loop, and could fetch a total of upward of $550 million.

Parkway Properties Inc., a Jackson, Miss.-based real estate investment trust, has put the buildings at 111 E. Wacker Drive and 233 N. Michigan Ave. up for sale in a package deal, sources say.

Sarah Clark, Parkway’s senior vice-president of strategic planning and investor relations, would say only that the company has said it’s looking to sell a 70% to 75% joint-venture stake in the buildings.

Parkway has tapped Holliday Fenoglio Fowler to market the two 32-story towers, which total 2 million square feet and are more than 95% leased. A spokeswoman with Pittsburgh-based Holliday Fenoglio declines to comment.

Parkway bought 233 N. Michigan, known as Two Illinois Center, in 2001 for $173.5 million, and then bought 111 E. Wacker, One Illinois Center, last year for $198 million.

The two buildings have plenty of competition for buyers in the East Loop market, where vacancies are among the highest downtown and several large tenants have bolted to new towers in the West Loop.

Joint-venture stakes in both the Aon Center and the two-tower Prudential Plaza complex are for sale. Aon’s owner, Wells Real Estate Investment Trust Inc., is looking to sell an unspecified stake; Pru Plaza owner BentleyForbes Holdings LLC says it’s looking to sell a 50% to 80% stake in Pru Plaza.

The two Illinois Center buildings, built in 1970 and 1972 and renovated in the late 1990s, were designed by the office of Ludwig Mies Van Der Rohe. News of Holliday Fenoglio being hired was first reported by Real Estate Alert, an industry newsletter.

Parkway CEO Steve Rogers said during an analyst conference call in May that the company planned to start marketing a joint-venture stake in the properties late this year, according to a transcript. Chicago is the company’s biggest market.

Late last year, Parkway walked away from an agreement to make such a deal when the prospective partner sought to change some terms, Mr. Rogers said during an analyst call in February.