Conshohocken developer lands missing piece

"For more than two decades, the view from developer Donald Pulver's office window has been of his own failing.

Several stories below, along the banks of the Schuylkill and at the base of the glass-and-granite office towers Pulver built on a once-forsaken stretch of Montgomery County waterfront, an ugly, low-rise factory has sat in defiance.

Despite Pulver's persistent offers to buy, owners Robert and Jack Florig would not sell their three Conshohocken acres, site of the brothers' steel-processing business.

Pulver had been trying to acquire the property almost since the Florigs moved their company there in 1984 from across the river in West Conshohocken. He even tried a takeover attempt through eminent domain that Commonwealth Court ultimately found improper in 2001.

Undeterred from his sweeping urban-renewal vision for the Conshohockens, Pulver built around RJ Florig Industrial Co., creating 1.2 million square feet of office space and two hotels. Still, the head of Oliver Tyrone Pulver Corp. never had a sense of completion - not with that factory planted where he envisioned another commercial tower.

Not until last week, when what Pulver had long coveted finally became his - oddly enough, with a big assist from the Florigs.

Pulver closed on a $10 million deal to pick up the property, which cost the Florigs only $135,000 nearly 26 years ago. As part of the transaction, the Florigs are providing an undisclosed amount of seller financing through a first mortgage.

"We basically had to take back a lot of the paper on the value of the land to inspire a deal," Robert Florig said, declining to elaborate. "We'd rather . . . get this behind us."

The land is the missing patch in the development quilt that transformed two blue-collar towns into one of the region's most recognizable office addresses.

Pulver's projects generate $3.5 million a year in real estate taxes alone, making him among the top taxpayers in the county. His critics add that they also generate traffic gridlock during rush hour.

Ironically, it was Pulver's high-rise handiwork around the Florig land that drove up the asking price. The morning after Tuesday night's closing, he was matter-of-fact about reaching "the end of the road" in what veteran real estate experts called an extraordinarily long land deal.

"You just got to finish what you start," Pulver said.

When told of the deal, Jim Mazzarelli, regional director at Liberty Property Trust, reacted not jealously, as one might expect from a competitor in this dismal commercial market, but with relief.

"It's a really good sign that things are starting to loosen up," Mazzarelli said. "Land is a nonperforming asset. If Don can close on a land deal, that means there's some loosening in the lending world - and that's a good thing."

The deal's financing is complex, involving not only the Florigs' holding the first mortgage, but also equity from private-investment entities and more than $8 million in state loans and grants. Those are to be used not just for the acquisition, but for demolition, site preparation, and some construction.

Such a joint-financing effort underscores just how dreadful the commercial real estate market is - even for a proven developer such as Pulver, who has been at it for almost 40 years.

"Couldn't do it without it," Pulver said of the public financing. "Not a chance."

The principal equity partners are entities controlled by Pulver; Brandywine Realty Trust, which has worked with Pulver on five office buildings and one hotel in the Tower Bridge complex; and the Delaware Valley Real Estate Investment Fund, a union pension fund.

None would provide specifics. But an application filed in October 2008 for one of the state grants said private equity would total $1.6 million, with the Florig purchase-money mortgage valued at $6 million. People close to the deal said those figures had changed, but they would not disclose by how much.

An earlier majority partner, Apollo Real Estate Advisors L.P., of New York, backed out in 2008 as the market for new-office construction evaporated, Pulver said.

Public funding consists of a $5 million state Redevelopment Assistance Capital Project grant, $2 million from the state Enterprise Zone revolving loan fund, and a $1.25 million loan from the state Infrastructure Development Program.

The deal was finalized in the One Logan Square offices of Hangley, Aronchick, Segal & Pudlin P.C., the Center City law firm representing Pulver. It came after nearly a dozen hours of phone calls and faxes, said Pulver's attorney, David Scolnic.

Helping provide the momentum to get the deal done, Scolnic said, was the commercial real estate market itself. It helped convince the Florigs that holding out for more money was not likely to deliver any promising results.

"When it became clear that values were not going to continue to go up forever, it made it possible for the parties to come together on a price," Scolnic said. "If they didn't do the deal, there was a risk that the financial markets would force the deal to fall apart entirely."

Said Robert Florig: "We were absolutely never greedy and never looking for anything other than what we deserved."

The only way he and his brother stand to "see any real serious money" from the sale, he said, is if "the economy goes well" and Pulver demolishes the now empty Florig factory and builds his planned office building there.

Pulver said demolition of the 109-year-old factory, once part of the Alan Wood Steel complex that dominated Conshohocken's waterfront, would start within a week. As soon as the market improves, construction will begin on the 14-story office building, to be known as 7 Tower Bridge.

"Right now, there's no financing available and no tenants available," said Pulver, who put the value of the project at $75 million.

Jerry Sweeney, president and chief executive officer of Brandywine Realty Trust, said his firm's involvement in the deal was, among other things, "a reflection of what we think the underlying long-term strength of the commercial market is, and protects our existing investment in Conshohocken."

Eighteen months ago, the Florig company relocated to a seven-acre site along the Blue Route in Plymouth Township. That was when it seemed to all parties that a deal on the Conshohocken property was near.

The Florigs had bought the Plymouth property in 1997 for a little more than $1 million - one year after the Redevelopment Authority of Montgomery County, at Pulver's behest, moved to condemn their Conshohocken site through eminent domain.

The Florigs appealed that action. In 2001, Commonwealth Court found that the Redevelopment Authority had transferred its condemnation power to a private citizen, Pulver, in violation of the Urban Redevelopment Law. The authority's attempt to appeal that decision to the state Supreme Court was rejected.

The Florigs responded with a federal lawsuit claiming their civil rights had been violated by the eminent-domain action. In December, U.S. District Court in Philadelphia dismissed that claim, and the Florigs immediately appealed to the U.S. Court of Appeals for the Third Circuit, where the matter is pending. That the Florigs have agreed to sell their property to Pulver has no bearing on their desire to press on with that case, said Richard Bazelon, their attorney in that action.

The Florigs "were damaged financially by the existence of an unlawful condemnation that went on for many years," Bazelon said Friday. "We have a very strong claim, which we are entitled to pursue and which we will continue to pursue."

The Redevelopment Authority responded with a claim of its own in U.S. District Court, where it is seeking reimbursement from the Florigs for attorneys' fees associated with their latest appeal of the eminent-domain case.

Those fees total $151,000, said Jerry Nugent, the authority's executive director, "and the meter is running."