UPDATE: CME Group Looks To Sell Chicago Board Of Trade Building
June 13 2011 - 12:49PM
Dow Jones News
CME Group Inc. (CME) said Monday it is looking to sell most of
the Chicago Board of Trade building, putting one of Chicago's most
iconic structures on the market.
The disclosure comes less than a week after the exchange
operator warned it may leave Illinois to avoid an increase in
corporate taxes. Yet a CME spokesman said sale of the Board of
Trade building isn't connected to discussions over a potential move
and declined to say whether it would make an exit easier.
The 80-year-old Art Deco building is comprised of three towers
and houses the trading floors for agricultural commodities such as
corn and wheat and financial derivatives such as interest-rate
futures. It was designated as a historic landmark in 1978 and
anchors Chicago's financial district.
CME said it has hired Jones Lang LaSalle Inc. (JLL) and Holly
Duran Real Estate Partners LLC to market the north and south
towers, which include the trading floors for agriculture
commodities. CME said it would lease back the space it currently
occupies in the buildings, including the trading pits.
The exchange operator said plans to maintain ownership of the
building's east tower, which houses the trading floor for its
financial-futures markets.
CME said it remains committed to "open outcry" trading, which
accounted for about 20% of the 3.1 billion futures and options
traded on its markets last year. In recent years, however, its
business increasingly has migrated to computer screens. CME opened
a new data center last summer in the Chicago suburbs to support
continued growth in electronic trading.
Driving the sale is CME's desire to exit the real-estate
business and free up capital to reinvest in its core derivatives
business, said Jamie Parisi, CME's chief financial officer, in a
statement.
CME spokesman Michael Shore warned against making a connection
between Monday's disclosure and comments by CME Executive Chairman
Terry Duffy last week.
Duffy, during the company's annual shareholders meeting
Wednesday, said he and Parisi had been examining the possibility of
relocating CME's corporate base outside Illinois. In January, the
state sharply raised the corporate tax rate as part of efforts to
put Illinois' finances in order.
CME leaders remain concerned about the tax issue, but they said
they want to stay in Chicago.
A group of about 25 protesters gathered outside CME Group's
Chicago headquarters a few blocks from the Board of Trade building
Monday. They decried the company's complaints about state taxes and
its warnings about potentially exiting Illinois.
"They're blackmailing us as taxpayers," said Regis Banks, a
Chicago city worker and local union official, who said budget
pressures forced him and his colleagues to take furlough days while
the profitable CME received $15 million in local government
incentives.
-By Jacob Bunge and Howard Packowitz, Dow Jones Newswires;
312-750-4117; jacob.bunge@dowjones.com
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