The Wallstrip Blog

Sam Zell’s at it again. Though he said today that Tribune Co. has no liquidity issues and will be able to pay off its debt, things don’t look so good for the Tribune Tower.

When Zell put the Chicago Tribune’s home on the market, most people thought he was looking for a sale-leaseback deal. Now, it looks like he might want to sell to a developer. Read: the Tribune Tower might be going residential.

Here’s more, from the Chicago Sun-Times:

• When Tribune Co. Chairman Sam Zell decided in June to put the company’s iconic Michigan Avenue tower on the market, the common belief among real estate experts was that he wanted a standard sale-leaseback deal. That’s one in which the seller gets a lump of cash and agrees to a long-term lease that gives the buyer a safe return.
• But hold on. Sources said Zell, who has hired Eastdil Secured LLC to market the tower and a parking lot abutting it, is thinking big. They said Zell wants nothing better than to turn over all of Tribune Tower to a residential developer. Such an owner could use it as a Gothic ornament for new construction on the parking lot.
• That would mean moving Chicago Tribune staff somewhere else, possibly the company’s printing plant at 777 W. Chicago. An alternative would have the downsized Tribune squished into the lowest floors of the tower, with the floors above converted to condos.[...]
• Clearing the newspaper out of the tower carries risk for Zell. With markets slow and credit excruciating, a buyer might pay more if Zell would keep the company there on a lease. But as one expert said, “Their credit is so lousy that it wouldn’t matter that much.”

Read the full story here.

Wallstrip’s take on the fledgling newspaper industry:

Newspapers - July 2008