SBC Completes $338 Million Sale Leaseback of Office Campus Near Chicago

Chicago Tribune - November 16, 2005

In what could be the largest suburban office building transaction of the year, a real estate investment trust advised by Inland Real Estate Group has purchased the Hoffman Estates campus of SBC Communications Inc. in a $338 million sale/leaseback deal. As a part of a long-term agreement the telecommunications giant will occupy the top-quality, three-building complex, which was once the headquarters of Ameritech Corp.

Renamed SBC Center after the San Antonio-based company's 1999 acquisition of Ameritech, the 152-acre site is along the Northwest Tollway near Barrington Road. The buildings were constructed between 1991 and 1992. The campus totals 1.69 million square feet, including common areas such as hallways. The price is about $200 a square foot. About 1.3 million square feet of space is contained in a single, four-story structure. Not included in the deal is about 80 acres of vacant land that SBC continues to own.

SBC signed an initial 11-year lease. But with renewal options, the lease could run until 2045, Inland said. In the first year, SBC will pay $22.7 million in rent, Inland said. As a result, Inland's initial return would be 6.7 percent, a low yield that reflects SBC's creditworthiness. The price surpasses the $257 million paid this year by Indianapolis-based Duke Realty Corp. for nearly 1.4 million square feet of office space near O'Hare International Airport.

The SBC transaction is the second big suburban office acquisition that Oak Brook-based Inland has made this year. In July another Inland-managed REIT paid $220 million for the Lincolnshire headquarters of human resources firm Hewitt Associates Inc. Including the SBC transaction, Inland says it has acquired more than $4.4 billion in real estate assets this year, making the firm one of the largest property buyers in the nation, managing a $13 billion portfolio. Sphere: Related Content