Block 37 Office Building to sell for $182 million

(Crain's) — Prudential Real Estate Investors LLC is paying $182 million for the 16-story office tower at Block 37 in the Loop, stepping in after an earlier deal fell apart.

The Newark, N.J.-based investor is scheduled to close Thursday on the acquisition of the 439,434-square-foot building at 22 W. Washington St., sources say. Prudential's price of $182 million, or $414 a square foot, is about $5 million less than Israeli-based investor IDB Group agreed to pay for the building in July.

Prudential is buying the property from its developer, a venture between Chicago-based Golub & Co. and New York-based investment manager BlackRock Inc.

Completed in 2008, the building is 98.9% leased, according to real estate data provider CoStar Group Inc. The developers refinanced $115 million in construction loans late in 2008.

Chicago-based investment research firm Morningstar Inc. rents 268,253 square feet at 22 W. Washington St. The most visible tenant is WBBM-TV/Channel 2, whose newscasts can by seen by State Street-area shoppers as they walk past the ground floor's large windows. The TV station leases 116,499 square feet.

Prudential had previously looked at the building before an affiliate of IDB Group agreed to buy it. But the Israeli investors, who had already paid a hefty $117 million for the 112,037-square-foot Barneys New York store on Oak Street this spring, did not close on the acquisition amid a shaky U.S. economy.

When the deal with IDB Group fell through, Chicago-based Holliday Fenoglio Fowler L.P. brokers working on the sale resumed negotiations with Prudential.

Prudential's local investments include the 37-story, 451-unit Left Bank at K Station apartment building in the West Loop. Prudential also is buying Sono East, a 324-unit apartment building under construction on the edge of Lincoln Park.