Thursday, March 15, 2007

JPMorgan Enters Sale and Partial Leaseback of Detroit Tower

CoStar Group - March 14, 2007

Saying it "makes more sense" to be a tenant rather than a building owner, JPMorgan Chase has sent another of its big-city namesake towers into the hands of investors.

The financial services firm announced a deal Tuesday to sell and lease back the Chase Tower in downtown Detroit, continuing a string of recent sale-leasebacks throughout the Midwest.

Locally based Sterling Group is buying the 14-story, nearly 600,000-square-foot building for an undisclosed sum. JPMorgan signed a 10-year lease with renewal options for eight floors totaling almost 215,000 square feet.

"It makes more sense to be a long-term tenant rather than owning the building," said Dick Wade, president of Chase in Michigan.

Sterling Group will lease the remainder of the building. The firm owns and manages several other downtown Detroit buildings, including the 43-story, castle-like Guardian Building, one of the city's most recognizable high-rises.

Chase Tower was constructed in 1959 as headquarters for the National Bank of Detroit, Chase's predecessor. The buidling occupies a prominent location at 611 Woodward Ave. in the city's business district.

Last October, JPMorgan closed a deal that sent 33 properties to a fund managed by Toronto-based Brookfield Asset Management for about $460 million. The 5.3 million-square-foot portfolio spanned 10 cities, mostly in the Midwest, and featured several trophy-class building, including 300 S. Riverside Plaza in Chicago and namesake high-rises in downtown Phoenix and Milwaukee. JPMorgan leased back significant portions of space as part of that deal.

Last month, Brookfield flipped two former JPMorgan assets -- the 750,000-square-foot Chase Tower in Phoenix and the 412,500-square-foot North American Technology Center in Houston -- to Crystal River Capital, a specialty finance company externally managed and advised by a wholly owned subsidiary of Brookfield Asset Management, for about $234 million.

JPMorgan anchors both those buildings under 15-year, triple net leases originally signed with Brookfield. Sphere: Related Content

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