Posted by chicagomedia.org on June 26, 2008 at 07:30:25:
Tribune Tower May Be Going Up For Sale
Chairman Sam Zell Wants To 'Maximize The Value Of All Assets'
It's been a fixture on the Magnificent Mile since 1925, but the Tribune Tower may soon be on the market.
CBS 2's Dana Kozlov reports that the Tribune co. is exploring a possible sale, and that's got people talking.
The 83-year-old Tribune Tower literally makes people stop and stare.
But today, owner Sam Zell told Tribune employees he's in discussions with real estate firms to determine how to generate the most value from the landmark. In other words, he wants to sell.
Crain's commercial real estate reporter Thomas Corfman says this isn't a surprise.
"The company has to sell off assets...borrowed too much money...not a time to be sentimental," Corfman said.
The neo-gothic tower was one of Chicago's first skyscrapers - and has a prime Michigan Avenue location. Corfman believes - and in a memo, Zell indicated - he might sell and then lease back the space.
The tower is just the latest Tribune asset Zell wants to unload - along with the Cubs, Wrigley Field and the Times Mirror Square in Los Angeles.
Many Tribune employees, off-camera, say this announcement is another swipe at faltering morale and a disappointment to fans of the tower. Others, like Lionel Page, say financially, it makes sense.
"As long as he doesn't sell the company and I still have a job, I'm happy," said Page, Tribune co. employee.
Zell said in a memo posted on the Tribune's site that he had said from the beginning there would be "no sacred" cows and all efforts would me made to maximize the value of company assets. Thus, the memo said, "we are in the process of asking a number of real estate firms to give us their best thinking on how we can generate more value from Tribune Tower in Chicago, and the Times Mirror Square complex in Los Angeles."
Zell said nothing less than full market value would be accepted for the Tribune Tower, nor the Times Mirror Square Complex, where the Tribune-owned Los Angeles Times is headquartered.
A request for proposals is being issued on Wednesday, the memo said.
The company said it plans to maintain an "ongoing ownership position" in both properties.
Zell earned a fortune as a real estate investor. He said in the memo that he realized there would be debate about what the company "should or should not do with the properties."
"Both Tribune Tower and Times Mirror Square are iconic structures, deeply intertwined with the history of this company," Zell wrote in the memo. "But, they are also both under-utilized, and as employee-owners, it's in our best interests to maximize the value of all our assets."
Zell also said he expects to continue "some level" of occupancy in the buildings.
The tower at 435 N. Michigan Ave. was completed in 1925, following an international design competition and three years of construction. It is known for the artifacts and historic stones from around the world that are embedded inside its exterior walls.
The company occupies 93.5 percent of the 631,000-square-foot building, which houses its corporate headquarters, the Chicago Tribune newspaper offices and newsroom and WGN radio.
Thomas Corfman says it's difficult to put an exact value on the Tribune Tower, estimating it might be worth about $160 million.
Zell's indication he might lease back the space could impact price, especially now that the downtown commercial real estate market is at a virtual standstill.
(CBS)