closed

Parkway completed the acquisition of One Illinois Center, which includes plus closing costs and transfer taxes of approximately $1.6 million; anticipated building improvements of $3.7 million; and projected leasing costs of $12.1 million during the first two years of ownership. The total purchase price equates to $215.4 million, or $215 per sf. According to Parkway officials, the purchase price represents an estimated 23% discount to the current estimated replacement cost of $280 per sf.

Using first-year estimated net operating income of $13.5 million and the total purchase price, the property is expected to generate an initial unleveraged yield or going-in cash capitalization rate of approximately 6.3% in the first twelve months of operations. The buy was funded by a $148.5 million non-recourse first mortgage at a fixed interest rate of 6.29% with interest-only payments for five years and a 10-year maturity.

Additional purchase funding was provided by a $33.7-million mezzanine loan with a six-month term at an interest rate of LIBOR plus 130 basis points, proceeds from the recent $105.5-million sale of Viad Corporate Center in Phoenix and amounts drawn under existing lines of credit.