Parkway Properties completed the buy-back of a 70% interest in the building last month for $139.7 million, which puts the value of the Jackson, MS-based REIT's sole Chicago asset at $199.6 million. That is up nearly 16% from the price Parkway Properties paid in 2001.
Parkway Properties already has fielded calls about 233 N. Michigan Ave., which is besting the submarket as well as overall Downtown leasing market with a 92% occupancy rate. Vacancy in the 22.1-million-sf East Loop submarket stands at 18.1%, according to CB Richard Ellis, also a tenant in the building.
"We've had some calls on the asset, but have not moved forward with anyone," says president and chief executive officer Steven G. Rogers. He explains during an earnings conference call that senior management is focusing on creating a $500-million discretionary fund, with $150 million expected to come from institutional investors, before working on a joint venture deal involving 233 N. Michigan Ave.
Although he would not rule out putting the asset into the discretionary fund, Rogers says investors are reluctant to accept company properties, as it could create conflicts of interests. "Of all of the 64 assets in our company, we think this would be an eligible asset," Rogers says. "But we've had no discussions specifically with investors on this asset to let us believe this one would go into the fund."
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