CHICAGO -- Trizec Properties Inc. and Metropolitan Life Insurance Co. have reached a deal that transfers ownership of Sears Tower to New York-based MetLife, it was announced Thursday.
The insurance company paid $9 million for Trizec's second mortgage on Sears Tower, the nation's tallest building. But Trizec will continue to manage and lease the property under a new contract that will take effect in January 2004.
TrizecHahn Corp., a predecessor to Trizec, a real estate investment trust, took control of Sears Tower in 1997 when it purchased a second mortgage on the building valued at about $200 million from a Boston-based pension fund for $70 million. But the building's title stayed in a trust set up for the original owner, Sears, Roebuck & Co. MetLife holds the first mortgage on the building.
Under terms of its mortgage purchase, Trizec had a right to assume ownership of the building this year. However, the transfer of the title did not take place and stayed with the trust established by Sears.
The $9 million paid by MetLife represents the equity Trizec held in the skyscraper, according to Brian Fox, a MetLife official.
The negotiations between Chicago-based Trizec and MetLife began earlier this year, and were driven by a rental market that still holds an aversion to skyscrapers two years after the Sept. 11, 2001, terrorist attacks.
The building was 89.2 percent leased in the first quarter of this year and was reportedly generating enough cash to keep Trizec current with its mortgage payments.
Several high-profile tenants have announced plans to move out of Sears Tower, including the local offices of Goldman Sachs & Co., whose lease runs until 2011, and Fireman's Fund Insurance Co.
Sears Tower was designed in the 1960s by the architectural firm of Skidmore, Owings, and Merrill. Construction of the stainless-aluminum and bronze-tinted glass building was completed in May 1973.