KBS to acquire Chicago Citigroup tower

The Newport Beach, California-based real estate investment firm has agreed to purchase the office building from a GE-led joint venture for $435 million.

Newport Beach, California-based KBS Realty Advisors will purchase Chicago’s Citigroup Center tower for $435 million from a joint venture between GE Asset Management and a German partner represented by Estein & Associates. 

Once the sale is finalized, it will represent the highest price for a Chicago office tower since July 2010, when KBS purchased the 1.3 million-square-foot tower at 300 North LaSalle for $655 million. That deal, which sold at $503 per square foot, remains a Chicago record, according to a report from the Chicago Real Estate Daily. Comparatively, the Citigroup Center is selling for $298 per square foot. KBS declined to comment on the purchase.

The 43-story property in Chicago’s West Loop neighborhood measures almost 1.5 million square feet. The building sits above Chicago’s Olgilvie Transportation Center, which serves three commuter rail lines. Current tenants include Citigroup and the headquarters of online travel agency Orbitz Worldwide. National Union Fire Insurance recently signed a 10-year lease in the tower starting in 2014, which will bring the building to 93 percent occupancy, according to data provider Real Capital Analytics. Located at 500 West Madison Street, the tower was designed by German architect Helmut Jahn and completed in 1987.

For GE Capital Real Estate, the sale of the tower is part of a broader shift in focus from equity real estate investments to real estate financing. In May 2005, GE sold a 50 percent stake in the Citigroup building to Orlando-based Estein, which represents a group of German investors. At the time of the transaction, the office tower was valued at $370 million.

KBS and its affiliate KBS Capital Advisors have completed approximately $30 billion in commercial real estate transactions since 1992. KBS has created six institutional commingled funds as well as 14 separate accounts with public and corporate pension plans and five sovereign wealth funds.