For those of you who have been trippin on the Sears Tower prediction

[hang a left]

March 12, 2004
MetLife sells Sears Tower

by David Roeder, Business Reporter
Chicago Sun-Times

Chicago - Sears Tower is being sold, and the deal represents votes of confidence both in the Chicago real estate market and the nation's war on terrorism.

MetLife Inc., owner of the 110-story tower in the West Loop, disclosed the sale Thursday. MetLife wouldn't reveal the buyers, but a source close to the sale said they are New York investors who held the lease on the World Trade Center.

The buyers, the source said, are Lloyd Goldman, Joseph Cayre and Jeffrey Feil. The same men also were named as the buyers by the Slatin Report, a Web site covering New York real estate. All are prominent but secretive Manhattan landlords.

Goldman and Cayre joined with Larry Silverstein in buying the trade center lease for $3.2 billion months before the twin towers were destroyed in the terrorist attacks of Sept. 11, 2001.

Silverstein is embroiled in lawsuits over a $7.1 billion insurance payout for his ownership group. A spokesman said Silverstein is not involved in the Sears Tower deal.

MetLife did not report the sales price, saying only that the deal gives it a $90 million after-tax gain. The giant insurer held a $760 million mortgage on the property, so the sales price could exceed $850 million.

But some experts said the price could be less, especially if MetLife has reduced the value of the building on its books.

Many Chicago brokers were astonished by the swiftness of the sale, which occurred without MetLife taking competing bids. Brokers said the Sears Tower "offer book'' hit the streets only a couple of weeks ago.

"Somebody came in with a pre-emptive bid. It must have swept them off their feet,'' one said.

Appraisals of Sears Tower have fluctuated wildly since the terrorist attacks suggested the building, the tallest in the United States, could be a future target. Before Sept. 11, 2001, an appraisal listed its value at $911 million, but that was reduced to $826 million last year.

Goldman Sachs & Co. is a leading tenant in Sears Tower, with a lease until 2011, but it plans to move to another building. That was the tower's biggest loss after the Sept. 11 attacks.

A spokesman for Chicago-based Trizec Properties Inc., manager and leasing agent for the building, said other tenants have renewed their space and new ones have signed on, giving it a healthy and stable occupancy of 89 percent. Rents, however, are cheaper in the building, and that factored into its lowered valuation.

"It's still one of the best buildings in Chicago. It just has bad karma,'' said Drew Neiman, principal of the John Buck Co. and a former leasing agent for the building. He said he expects its value and rents will rise as the nation's fear of terrorism subsides.

But developer Steven Fifield said Sears Tower still will need aggressive marketing campaigns because it is no longer attractive to large tenants. "If you look at the Empire State Building, it's all small tenants, and that may be the way Sears has to go,'' Fifield said.

Trizec said it doesn't know if the new owners will retain its services.

Trizec previously was the property's controlling owner through a second mortgage. MetLife bought that interest for $9 million last August to avoid a default.

MetLife said the sale should close by the end of June. The transaction ends the insurer's financial involvement with the building after 14 years.

In late 2002, MetLife struck a deal in Chicago with Goldman, Feil and others, selling them a 37-story building at 10 S. La Salle for $120 million.

Sears, Roebuck & Co. moved out of its signature home in 1993 when it relocated to Hoffman Estates.

Contributing: Eric Herman

Copyright 2002-2003 Digital Chicago Inc. Used with permission.

[Moderator]

1. Hi there

As the last line states, that article is copyrighted. Basically, this post violates three different rules: Subject doesn't match the title of the article, there's no link, and you've violated copyright. I'm locking, feel free to repost correctly.