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 The acquisition was valued at $1.3 billion, making it the highest
price paid for a U.S. office tower outside of New York, according to
MarketWatch, which first reported the news.
The 110-story Willis Tower at 233 South Wacker Drive is the
second-tallest U.S. office building with (0.35 million square
meters) of space, and the fifth-tallest office building in the
world, Blackstone said in a news release.
"From a risk-adjusted return basis, it's very attractive, especially
with what’s going on in other market places," said Ken Riggs,
president of Situs RERC, which does valuations of commercial real
estate.
"Even though it's an old building, it's an iconic building. It's in
the West Loop, which I view as a market that has very strong
long-term potential," Riggs said.
 Blackstone agreed to buy the property, which features a top Chicago
tourist attraction in the Skydeck on the 103rd floor, from New York
investors Joseph Chetrit and Joseph Moinian and Skokie,
Illinois-based American Landmark Properties, MarketWatch said.
The Skydeck attracts 1.6 million visitors annually, a draw that
Blackstone hopes to build on. The Skydeck includes the "Ledge,"
glass cubes that extend from the Willis Tower with an unobstructed
downward view because of the see-through flooring.
"We are bullish on Chicago as companies expand within and move into
the city and look for first-class office space," said Jacob Werner,
a managing director in Blackstone's real estate group. "We see great
potential in further improving both the building's retail operations
and the tourist experience."
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Blackstone plans to revamp the Skydeck due to the growing popularity
of observation decks, MarketWatch said. The Empire State Building
earned nearly 40 percent of its revenue from 4.3 million visitors,
or about $82 million in income after expenses. The Willis Tower gets
more than $25 million annually, and Riggs said naming rights could
boost that when they expire.
The agreement was between Blackstone Real Estate Partners VII and
233 South Wacker Drive LLC. The owners paid $841 million for the
property in 2004. The building was the world's tallest from when it
opened in 1973 until 1998.
On a square-foot basis, the price for the Willis Tower was about
$340, a fraction of what trophy towers fetch in major cities,
MarketWatch said.
Douglas Harmon of Eastdil Secured was the exclusive representative
on the transaction, Blackstone said.
(Reporting by Herbert Lash; Editing by Marguerita Choy and Jonathan
Oatis)
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