CHICAGO – Blackstone Group, a private equity real estate investor with about $81 billion under management, has reached an agreement to buy Chicago’s iconic Willis Tower, the company announced Monday.
The purchase price is $1.3 billion, according to a source.
The deal for the formerly named Sears Tower, said to have been reached over the weekend, would be the highest price ever paid for a U.S. office tower outside of New York. It would also shatter the Chicago record of $850 million set last year.
“We are bullish on Chicago as companies expand within and move into the city and look for first-class office space,” Jacob Werner, a managing director in Blackstone’s real estate group, said in a statement. “Moreover, we see great potential in further improving both the building’s retail operations and the tourist experience for one of the most popular destinations for visitors to Chicago.”
The Wall Street Journal, which first reported the agreement on MarketWatch, said Blackstone plans to invest heavily in the retail portion of the nation’s second-tallest building and in upgrading its 103rd-floor Skydeck, in hopes the deck will become a cash cow like those of other skyscrapers.
Jonathan Gray, Blackstone’s head of real estate, told MarketWatch that the company hopes “to really make this more of a comprehensive tourist attraction” as well as an office building.
The Skydeck is among the tower’s regular revenue streams. It reaped about $25 million in admissions revenue in 2014, an amount that has been climbing annually. Its broadcast antennas brought in more than $13 million in the 12 months ended in November.
The Chicago Tribune reported Friday that Blackstone was in talks to buy Willis Tower and has previously reported that commercial real estate broker Eastdil Secured, which is handling the Willis Tower sale, was not marketing the property because of ongoing negotiations with a potential buyer.