Home Alts News Piedmont Office Realty Agrees to Sell Aon Center in Chicago

Piedmont Office Realty Agrees to Sell Aon Center in Chicago

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Piedmont Office Realty Trust Inc. (NYSE: PDM), formerly known as Wells Real Estate Investment Trust Inc., has entered into a binding agreement to sell its largest asset, Aon Center, located at 200 E. Randolph Street in downtown Chicago for $712 million ($260 per square foot) to The 601W Companies, a private real estate investment company. The sale is anticipated to close early in the fourth quarter of 2015.

Aon Center is a 2.7 million square foot, 83-story, multi-tenant, trophy office tower constructed in 1972. Situated on approximately 3.5 acres in Chicago’s East Loop, Aon Center offers views of the city, Lake Michigan and Millennium Park. Last week, Piedmont announced that the Kraft Heinz Company, the newly-merged, global food and beverage giant, will relocate its Chicago headquarters from Northfield, IL, to five floors of the building. The property is approximate 86 percent leased.

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“The successful sale of Aon Center will be the culmination of Piedmont’s long term strategy of transforming the asset into one of Chicago’s most prestigious office towers,” said Piedmont president and chief executive officer Donald A. Miller, CFA. “We have been fortunate to attract a number of distinguished tenants to Aon Center, such as KPMG, Microsoft, United Health Group, Integrys, the Federal Home Loan Bank of Chicago, and most recently Kraft Heinz. Additionally, we have also been successful in renewing existing quality tenants such as Aon, JLL, AT&T, and Edelman,” concluded Miller.

Piedmont’s Ray Owens, executive vice president – capital markets, and Tom Prescott, executive vice president – Midwest region, along with the JLL team of Bruce Miller and Nooshin Felsenthal, facilitated negotiations on behalf of the seller.

“Our regional management team, in partnership with JLL’s leasing team, has worked tirelessly over the last several years to secure and retain a number of blue-chip tenants for the benefit of both Aon Center and the city of Chicago,” said Ray Owens. “Those efforts were rewarded by the level of interest in this transaction and we are extremely appreciative of JLL’s efforts on our behalf in marketing the property for sale,” added Owens.

In conjunction with the closing early in the fourth quarter, the company anticipates receiving net sales proceeds of approximately $640 million, net of buyer-assumed lease abatements and approximately $48 million in contractual tenant capital improvements and leasing commissions. Piedmont intends to use the proceeds to enhance its balance sheet through the pay-down of debt and to position the company to potentially fund strategic acquisitions and/or selective share repurchases, depending upon the opportunities that arise.

Piedmont Office Realty Trust Inc. is an owner, manager, developer and operator of Class A office properties located in select submarkets of major U.S. cities. Its geographically-diversified, approximately $6 billion portfolio is comprised of 21 million square feet.