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Parkway Properties Wraps $198M East Loop Buy

CHICAGO-Parkway Properties Inc. closes on the purchase of One Illinois Center at 111 E. Wacker Dr.

By Dana Dubriwny | Updated on July 12, 2006

CHICAGO-Parkway Properties Inc. has closed on the $198-million purchase of One Illinois Center at 111 E. Wacker Dr. The company has retained Wachovia Securities to market the property together with the company’s Two Illinois Center property located at 233 N. Michigan Ave.

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.

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