Citicorp Said To Be Near Sale Of Skyscraper
Citicorp is said to be on the verge of selling a major office tower in Indianapolis that it acquired in a vast restructuring announced Thursday by the Galbreath Co.
A deal could set the stage for dozens more sales Citicorp has said it is contemplating for marginally troubled properties in its loan portfolio.
Such deals typically include a reduction in the loan amount, an infusion of equity from new investors, and a provision giving the bank a piece of any future profit on the building.
Citicorp Was Lead Lender
Citicorp originally led a $180 million construction loan for the 885,000-square-foot building. The loan tumbled into technical default when leasing fell behind a predetermined schedule. The property was a key part of the restructuring in which Galbreath deeded 10 properties back to lenders. The property developer is based in Columbus, Ohio.
The current environment would call for a buyer with an appetite for risk, although the property is considered comparatively healthy. One source said the buyer might be an investment fund controlled by financier Sam Zell of Chicago, a renowned "bottom fisher."
Interest in Indianapolis
An official at Zell's investment group would not comment on whether it was negotiating to buy the building but confirmed it had contacted Citicorp and other banks about foreclosed real estate and was interested in making acquisitions in the Indianapolis central business district.
Citicorp also declined to comment.
Banking companies getting smaller properties in the restructuring included Banc One Corp., the BancOhio unit of National City Corp., Chemical Banking Corp., and Barnett Banks Inc.
Banc One Refinancing
Banc One has refinanced its headquarters in Columbus as part of the deal and is expected to file the mortgage in several days.
Galbreath approached lenders more than a year ago when problems first began to crop up at a handful of properties that carried about $750 million of debt in total.
The restructuring enables Galbreath to satisfy lenders who had started filing claims on various properties to protect their interests.
In addition to deeding property to the lenders, Galbreath also sold and refinanced a number of properties to reduce its overall debt to a manageable level.