The building that Chicago Tribune reporter Robert Channick calls “Chicago’s monument to newspaper journalism” is officially headed to use as a reborn mixed-use development more than 90 years after its grand opening.
The iconic 36-story Tribune Tower built for the Tribune Media Co.‘s flagship newspaper is now the property of Los Angeles-based CIM Group, which on Sept. 28 announced that it has closed on its $240 million purchase of the building from Tribune.
A neo-Gothic structure that was named a landmark building by the City of Chicago in 1989, the Tribune Tower sits prominently on the eastern end of Michigan Avenue’s “Magnificent Mile.” CIM’s plans include retail, residential, office space and a hotel.
CIM is acquiring a three-acre property that includes buildings to the north of Tribune Tower built for WGN-AM 720 and WGN-9.
Avi Shemesh, co-founder and principal of CIM, told the Tribune, “Our intent is to maintain as much as possible — this could be the facades and perhaps even the entire buildings. They’re beautiful buildings.”
Construction on Tribune Tower is expected to begin in fall 2018.
At the same time, Tribune completed the sale of two lesser-iconic properties in the City of Angeles, for $190 million cash (and possible contingent payment of up to $45 million more): Los Angeles Times Square (a.k.a. the Times Mirror Square building) and Olympic Plant.
Vancouver, B.C.-based Omni Group is acquiring the property — home to the Los Angeles Times since 1935. A “bustling mixed-used center” is in the works, the newspaper reports.
“We have made considerable progress toward achieving our goal of realizing at least $1 billion of gross proceeds from the sale of some of our most significant real estate holdings,” said Tribune Media President/CEO Peter Liguori. “Real estate sales closed from 2014 through today’s announcement have generated $576 million of gross cash proceeds. Importantly, we estimate the value of our remaining real estate portfolio to be at least $500 million, including properties in Chicago; Southern California; Fort Lauderdale, Fla.; and Long Island, N.Y.”
The company expects that the three properties sold this week will generate approximately $330 million of net cash proceeds after paying taxes, transfer and legal fees and broker commissions.
Tribune this year has now sold nine properties, for $519 million of gross cash proceeds (or approximately $409 million of net cash proceeds).
As a result of these nine sales, for full-year 2016, the company expects a reduction in rental revenues of $11 million and lower operating expenses of $5 million, which would result in a corresponding decrease in Adjusted EBITDA of $7 million.
On an annualized run-rate basis for 2016, the nine real estate sales would have reduced rental revenues by $34 million and lowered operating expenses by $17 million, which would have resulted in a corresponding decrease in Adjusted EBITDA of $17 million.
Investors reacted favorably to the closings. As of 3:10pm Eastern on Sept. 28, shares in TRCO were up 5.3%, to $37.31.