Chicago Tribune from Chicago, Illinois • 30

30 Section 1 Chicago Tribune, Sunday, November 6, 1988 From Page 1 Tower K1 SALE 30 OFF ALL CASHMERE. All our incomparable cashmere is 30 off. Wonderful cashmere coats originally $980 now $686. Beautiful cashmere blazers originally $398 now $278. Sumptuous single-ply cashmere sweaters originally $128 to $170 now $89 to $1 19.

2-ply cashmere sweaters originally $168 to $212 now $1 18 to $148. Come into Alcott Andrews for this incredible sale of 30 off all cashmere. same time wanting to get top dollar by agreeing to continue to lease the space it vacates for the time it takes a new owner to find new tenants. Silverstein also said that Sears may not get top dollar if it insists, as Sears has said it would, that the building continue to be called Sears Tower. 1 "Some potential buyers may insist that Sears come down in price if they want to retain the name," he said "Some might even decline to bid I would think that anyone who buys the tower will have a big enough ego that hell want his name on it" Nobody, however, believes that Sears won't find a potential buyer under any circumstances.

"That's not likely to happen," said West "Sears may not get the price it wants, and a buyer may not get everything he wants, but at some point and at some price, a deal will be struck." Sears and Goldman Sachs first must evaluate what the tower is worth, if they have not already done so, Manno noted The next step will be to decide whether to sell the building outright or retain a minority ownership interest, as Canadian-based BCE Development Corp. did when it sold Quaker Tower. As for the Book on the tower, it will likely include a history of the building; a list of tenants and the terms of their leases; the likely cash stream that the building will generate over the next 10 to 15 years; a description of the building mechanical systems; and an. analysis of Chicago's real estate environment The only thing missing from the Book might be the asking price for the building, West noted "With some of the prices that are being offered for trophy commercial buildings today, Sears would be crazy to specify an asking price," he said "There's always the danger that you will undervalue your own build-ing." When a prospective buyer receives the confidential Book, he is likely to cept for the fact that Sears Tower's windows occasionally have been blown out by high winds, there's no reason to believe that the building is in need of any major rehabilitation. "It's only 14 or 15 years old; it's still prime, he said Sears unwittingly may have scared off potential buyers and even lowered the tower's eventual price by announcing that it planned to move all but its corporate headquarters staff from the structure, according to some analysts.

"Who ends up bidding will depend to a great extent on whether Sears is really serious about relocating 8,000 employes from the building, leaving a lot of vacant space available for lease. If that's the case, then it's more likely that a major development firm, like a Tishman Speyer or a Trammel Crow, will end up buying the building," Equitable's West said "Unlike other investors who consider a building less than fully leased a risk, a lot of developers, being the entrepreneurs that they are, view vacant space as an opportunity to enhance a building's value by leasing it up," he said West manages Equitable's $2 billion portfolio of real estate investments in the northern and central regions of the United States, including Equitable Plaza and a portion of Qtyfront Center in Chicago. "I think they made a mistake by announcing they're going to relocate 8,000 employees from the building," said Stephen H. Silverstein, chairman and chief executive officer of Balcor Co. the Skokie-based international investment management firm wholly-owned by Shearson Lehman Hutton Inc.

"That means that a buyer is going to have to reckon with what to do with about 1.5 million square feet of vacant space, most if not all of which is located in the lower half of the building, traditionally the most difficult portion of an office building to lease up. "Most institutional investors pension funds, insurance firms, etc. who look for stable earnings are likely to look at all that vacant, unproductive space and conclude that an investment in the building is not that attractive," Silverstein said "I know we wouldn't bid under Sears' current scenario. One local real estate executive, who requested anonymity, estimated that the building is worth only about $750 million if Sears vacates a substantial amount of its current office space. Fully leased, the building most likely would sell for in excess of $1 billion, he added According to LaSalle's Manno, Sears could solve its dilemma of wanting to move most of its operations out of the tower while at the Continued from page 1 mentioned The U.S.

and Japanese insurance Companies manage large amounts of pension and real estate investment funds in addition to selling insurance. Individual megabucks investors like New York financier Donald Trump are rumored to be interested Also mentioned are such major real estate investment and development firms as MB Realty Trust, LaSalle Partners Tishman Speyer Properties, Trammell Crow Co. and Richard Ellis Inc. All are based in Chicago or have Regional offices here. That means they are intimately familiar with the city's office market and, consequently, would have a definite advantage over any outsiders who might want to bid, on a building like Sears Tower, which contains a whopping 3.6 million square feet of office space.

"I don't know, at this point, if buying Sears Tower would fit the investment strategies of the pension funds we manage, but, of course, we'll take a hard look at it," said James A. West, senior vice president of Equitable Real Estate Investment Management the real estate in-Vestment, development and property management 'arm of Equitable Life. "however, I think a deal for a building the size of Sears Tower is Boing to have to have more than one investor, if you exclude the cash-rich foreign real estate buyers," AVest added Handling the retailer's marketing efforts is Goldman, Sachs the successful New York investment banking firm. Goldman Sachs will likely put together the list of responsible investors, foreign and domestic. Initially, the list may include 25 or more prospective purchasers, according to real estate executives here familiar with the methods used to sell office skyscrapers.

"My guess is that they'll whittle the list to no more than six or eight prospects or investment groups who've expressed an interest in buy-ling the tower and who have the quality and qualifications Sears is looking for to pull off the deal," said Belcaster, managing part-ner of Tishman Speyer Properties. Potential foreign buyers, the Japanese, say it's unlikely they'd take the lead in bidding on an American landmark. They Tear the backlash such a move might generate among Americans. Tishman Speyer, in partnership Trammel Crow, purchased the 45-story J.C Penney Co. Inc.

head- study it carefully, checking to make Tribun photo The Sears Tower: Only those with the deepest pockets and the biggest egos need bid for the world's tallest building. quarters building in Manhattan earlier this year after the retailing firm decided to move its 2,200 management employees to the Dallas suburb of Piano, Tex. Belcaster said his firm would have to know more specifics be fore deciding whether or not to submit a bid. "We'll look at it, but I don't know if it would be appropriate for us right now," he said. Other than prestige, potential buyers would have good economic reasons for wanting the tower, real estate industry analysts point out "It's a reasonably good buy in today's market; it's a high-quality building; and it's in a prime downtown location," said Anthony R.

Manno managing director of LaSalle Partners. "That, plus the fact that it is the premier building downtown, means it's likely that it will always experience a high occupancy rate.6 Manno, who played a major role in brokering the sale of 90 percent, of Chicago's Quaker Tower Building to Shuwa Investment Co. of Japan earlier this year, also noted that ex sure mat all ot iears financial projections and its statements about the status of leases in the tower are accurate, Manno said Following that, he is likely to request a tour of the building and may begin preliminary negotiations with Sears. If after all of that, a buyer is still interested, he will be asked to submit a formal bid or, more likely, be invited to begin serious negotiations on price. Once a deal is struck, Sears management will have to submit the successful offer to the company's board of directors, Manno said The buyer, likewise, may have to seek approval from its board, or at least from its investors or other financing sources.

Ate CXI Andrews. American fcxprest and other major credit cards. 430 NORTH MICHIGAN AVENUE -OAKBROOK CENTER 312-923-0112 3I2-99O-83O0 MON.FRI. 10-0. SAT.

10-6. SUN. 12-5 IO-. SAT. 10-6.

SUN. 12-5 iBlGGINGSt W3S I tO AQUASCU1UM LID i JMquascutum lOF LONDON fi 'IV V- Yjh -kMi'i I 7 UP TO IS I 11 11 1 11 kjkj hip I Mi I III 0 Coat Fortnight fl 1) Visit our new shop and see the Aquascutum collection from England and until Sunday November 13th we will be giving away a luxurious pure cashmere scarf with each mens and ladies top coat purchased. The finest selection of classic overcoats in pure wools, rich tweeds and cashmeres will be complemented by a sumptuous scarf. Don't be left out in the cold, wrap up in style courtesy of Aquascutum. (fji i i i if uascutum HiwawmiCMtar Sprint Hid Mill SUti il lllinoli Centw Wbodgrm Festival Tin Cnrturf Mill Hirfim-lrvini SVC tbrktowR Shoppini Cmttr OrlMUl Squwi Fox fella) Cintw N.

Riversidi Pirk Mill Stntkrd Squari SouDiUaMil NortNxwk Court Bricipn1SC Ita Ma Shopping Carter Louis Jolltt Mill JifltrsM Squirt SC Ukihuret Shsppln Cmlar Lincoln Mill 900 North Michigan Avenue, Chicago, Illinois 60611. For further infomuupr, jjeajjall (312) 787 0225. 1 JL.