Monday, December 28, 2015

Brandywine Sells Cira Square, Former Post Office in Philadelphia

by Steve Lubetkin,
Brandywine Realty Trust is selling Cira Square, the former main US Post Office complex in the University City district of Philadelphia for $354 million. It’s the largest of a group of property sales the real estate investment trust announced Wednesday that Brandywine says will generate $389 million.

"The transactions reinforce our stated goals of prefunding our development pipeline and further improving our financial capacity through accelerated dispositions," Brandywine president and CEO Gerard H. Sweeney says. "The sale of Cira Square reflects our ability to both create and harvest value and will generate a significant gain to our shareholders.  We acquired the historic post office building in 2007, embarked on a multi-year renovation of this iconic Philadelphia landmark and rebranded it as Cira Square.  The other asset sales represent our continued efforts to reduce our ownership in non-core assets and markets.”

The five office properties Brandywine is selling contain an aggregate of slightly more than 1.2 million rentable square feet. The Cira Square property totals 862,700 square feet and is 100% leased to the General Services Administration and occupied by the Internal Revenue Service.  Brandywine expects the sale to close in the first half of the first quarter 2016, and says it will use the proceeds to prepay the current mortgage totaling $177.4 million, and the mortgage on the 1,662-space parking garage at the newly constructed Cira Centre South totaling $35.5 million.

After the transaction, Brandywine will continue to provide management services at the Cira Square property.

Brandywine also sold three office properties totaling 196,100 square feet in Carlsbad, CA, for $30.4 million, or $155 per square foot; a 1.6 acre development site at the corner of Second and King Streets in Wilmington, DE, for $6.5 million; and a 158,000 square foot flex/office property in King of Prussia, PA, for $4.6 million, or $29 per square foot.

Brandywine says it expects the transactions to result in a net gain of approximately $96.7 million.  Brandywine expects to use the net proceeds to fund current development commitments, reduce debt and general corporate purposes.

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