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Sears Makes a Towering Deal

November 08, 1994|From Associated Press

CHICAGO — The world's tallest building is getting a new owner.

Sears, Roebuck & Co. said Monday it will transfer ownership of the 110-story Sears Tower through a trust to a pension fund partnership managed by Boston-based Aldrich, Eastman & Waltch, which currently holds a mortgage on the landmark.

The deal will reduce Sears' debt by $850 million and resolve a financial dilemma caused by a drop in commercial property values since Sears remortgaged the tower nearly five years ago. Chicago-based Sears will record an after-tax gain of $195 million, or 50 cents per share, in the fourth quarter.

The black steel-and-glass monolith was designed by American architect Fazlur Khan and completed in 1973. It is 1,454 feet tall, topping the World Trade Center in New York by 86 feet. Sears said the building will continue to be named Sears Tower, and its corporate headquarters will remain there, in leased space.

The building is worth about $400 million based on current and expected office lease rates in Chicago, according to Jim Dorsey, Midwest regional president of Koll Inc., a commercial real-estate company based in Newport Beach.

Sears will transfer ownership of the tower and its related mortgages to a trust, under which the pension fund partnership AEW Partners will become the building's owner in 2003. The trust will repay Metropolitan Life Insurance Co., which holds $600 million of the $850-million mortgage under a deal struck in 1990.

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