CME Strikes $151.5 Million Deal To Sell Landmark Chicago Property
First Published Monday, 23rd April 2012 10:15 pm - © 2012 Dow Jones
--Joint venture between GlenStar Properties and USAA Real Estate Co to acquire north, south towers of CBOT building
--Price comes in at low end of range previously seen
--CME to lease back trading floor, office space for 15 years
(Adds comment from CME, buyer, background on the property and sale.)
By Jacob Bunge
Of Dow Jones NEWSWIRES
CHICAGO -(Dow Jones)- CME Group Inc. (CME) agreed Monday to sell most of its historic Chicago Board of Trade building to a consortium of real-estate companies for $151.5 million, while leasing back space the exchange group currently uses.
A joint venture between GlenStar Properties LLC and USAA Real Estate Company will take ownership of the property, according to a statement Monday from CME.
The deal includes the north and south towers of the historic Art Deco building, while Chicago's CME will retain ownership of the east building, where its trading floor for financial derivatives resides. CME agreed to a 15-year lease for the space it uses in the buildings it plans to sell, including office space and the company's trading pits for agricultural contracts. That lease begins immediately, according to a spokesman for CME.
The sale price came in at the low end of an anticipated range of $150 million to $180 million reported by the Wall Street Journal in February. The property initially had been expected to fetch as much as $210 million, but its value was seen affected by economic uncertainty stemming from the European debt crisis as well as the collapse of brokerage firm MF Global Holdings Ltd. (MFGLQ), a major tenant.
The Board of Trade building was constructed by the exchange in 1885, and was at the time Chicago's tallest building and its first with electric lights, according to CME. A 31-foot-tall aluminum statue of Ceres, the Roman goddess of grain and harvest, tops the building.
CME announced the planned sale in June 2011, as the 160-year-old exchange operator negotiated with Illinois lawmakers for a deal that would lower CME's tax rate. CME had threatened to move out of state to escape what executives called an unfair tax burden, though listing its iconic building for sale was not related to that matter, CME officials said at the time.
Selling the buildings will "allow CME Group to continue to focus on what we do best--running our exchanges and providing risk management tools to the world," said CME Chief Financial Officer Jamie Parisi in a statement Monday.
The new owners of the property plan to use its infrastructure to attract "a wealth of new technology companies," according to a statement from Michael Klein, principal at GlenStar, a Chicago commercial real estate investment and development firm. USAA Real Estate Co. manages about $12 billion and serves as a co-investor, acquirer and developer of properties.
CME shares closed Monday down $1.15, or 0.4%, at $271.90.
-By Jacob Bunge, Dow Jones Newswires; 312 750 4117; email@example.com
--Maura Webber Sadovi contributed to this article.