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Sears Tower a Keeper for Trizec in '03

CHICAGO-Quashing speculation that it will walk away from the 110-story trophy Jan. 2 when it is scheduled to assume ownership, president and CEO Timothy Callahan says the 3.5-million-sf tower will produce about 3% of Trizec Properties Inc.'s 2003 FFO.

By Mark Ruda | Updated on December 13, 2002

CHICAGO-Trizec Properties Inc. intends to become owner of the Sears Tower Jan. 2, says president and chief executive officer Timothy Callahan, and the REIT is basing its 2003 funds from operations estimates on the assumption that it will own the 110-story building for the entire year. Meanwhile, talks “are moving forward” with Metropolitan Life on restructuring the mortgage Trizec Properties, Inc. assumes on the tallest building in North America, Callahan adds, and could produce a new deal in January.

While quashing speculation that it may walk away from the trophy property three weeks from now, Trizec Properties instead is putting the 3.5-million-sf assets on its books at $774 million, Callahan says in a conference call Friday, while adding a corresponding debt load of $750 billion. Most recently, Sears Tower was appraised at $826 million, 9% less than a 2001 estimate of its value and just 6% more than the debt on the property.

“As things currently stand, the property will contribute six cents per share” to 2003 funds from operations, says Callahan, whose REIT’s expected range of $1.72 to $1.82 was below Wall Street analysts’ estimates.

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