Los Angeles-based private equity real estate firm CIM Group has purchased Chicago’s iconic Tribune Tower and an adjacent development site from its original owner for $240 million.
The deal includes the 35-story building at 425 North Michigan Avenue, which was built in 1925, and a vacant parking lot. Bidders proposed various uses for the latter property, including condominiums, a hotel and retail space, according to Crain’s Chicago Business. A spokeswoman for the firm declined to comment on the transaction.
“Tribune Tower is a prominent property with a rich history that has been a feature of the Chicago skyline for nearly a century. It's in an area that, today, is attracting new businesses and residents,” said Avi Shemesh, CIM’s co-founder, in a statement Wednesday. “After being active in the Chicago market for more than a decade, we have recently made several compelling investments that have expanded our growing presence in the city.”
Tribune Media Company, the parent organization of various media entities including 42 broadcast stations, sold the building as part of an ongoing effort to monetize its national real estate portfolio. Tribune Media has sold $89 million of properties in 2016 to date, according to a statement Wednesday.
In July 2013, Tribune Media’s former parent company, the Tribune Company, split into two separate entities, Tribune Media and Tribune Publishing, now known as Tronc, which is the publisher of newspapers including the Los Angeles Times and the Chicago Tribune. The latter is currently the Tribune Tower’s anchor tenant.
“Monetizing the significant assets of Tribune Media's real estate portfolio is a strategic priority for the company and we are extremely pleased with the outcome of this sales process,” said Peter Liguori, chief executive of Tribune Media Company. “Importantly, we're achieving prices consistent with the $1 billion valuation of our portfolio.”
Tribune Media expects the deal to close this quarter, according to Monday’s statement. Tronc has a lease through June 2018, but Liguori said in a staff memo that the company will move several hundred employees out of the Tribune Tower in the second quarter of 2017 because CIM plans to repurpose the building, according to Crain’s Chicago Business.
CIM’s most recent Chicago transaction was the August purchase of a 26,100 square foot parking lot at 1326 South Michigan Avenue, about two miles south of the Tribune Tower, according to real estate data provider Real Capital Analytics (RCA).
The private equity real estate firm bought the development site with local developer MB Real Estate for an undisclosed price and plans to construct a mixed-use building with 50 apartments, 7,700 square feet of retail and a parking garage. CIM has purchased four other Chicago apartment and office properties since April 2012, according to RCA.
The firm closed its latest opportunistic fund, CIM Fund VIII, on $2.4 billion in January 2015, according to a filing with the US Securities and Exchange Commission. It was unclear whether or not the Tribune Tower acquisition was made through Fund VIII.