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Sears Tower Secures $780M Refinancing

CHICAGO-Sears Tower ownership expects to save $10 million a year in interest after closing on a 10-year, fixed-rate loan, with plans to renovate the famous Skydeck.

By Gina Kenny | Updated on February 01, 2007

CHICAGO-The owners of the Sears Tower say they expect to save $10 million a year in interest after refinancing and closing on a $780-million loan from UBS. Carlton Group arranged the fixed-rate loan, which will have a term of 10 years. The Sears Tower, a 3.5-million-sf tower, is owned by 233 S. Wacker LLC, which includes American Landmark Properties, the Chetrit Group and the Moinian Group.

The new loan will have a fixed rate of 6.2%, replacing a variable rate loan that was currently at nearly 8%, Carlton Group chairman Howard Michaels tells GlobeSt.com. The building was also appraised, during the process, at $1.2 billion. “Other than saving them like $10 million a year in interest it also gives them a very low long-term fixed rate which stabilizes the building,” he says. The $780-million interest-only loan is replacing a $825-million variable rate mortgage from Bank of America, says a source familiar with the transaction.

The refinancing comes at a time where the ownership has closed, during a three-month period, about 225,000 sf of new or expanded office leases, including an 11-year lease agreement for 63,813 sf for Segal McCambridge Singer & Mahoney that was recently signed. Several major tenants have recently renewed including law firm Schiff Hardin & Waite, Bank of America and law firm Latham Watkins while Ernst & Young has recently expanded.

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