Sunday, March 28, 2010

GSA Leases 12,676 SF at 280-288 Boot Road in Downington

"Aggregate rental of the lease was $550,000. GSA is a division of the Federal Government that offers products, services and facilities that federal agencies need to serve the public. In this particular facility, the Coatesville Veterans Administration Hospital will utilize warehouse space to support its renovation projects at its main campus."

"Within the first year of ownership, First Eastern has increased occupancy at the property from 0% to 89%", Newton said. We are very proud to have helped generate these results in such a difficult economic climate."

"280-288 Boot Road is a 48,817 square foot building containing three two-story flex suites ranging in size from 12,869 SF to 18,865 SF. Each suite has its own outside entrance, first and second floor office space, large warehouse facility and two tailgates. Drive-in loading is also available. Other features include natural gas heat, central air conditioning and parking for 64 cars. GSA will join Jimmy Duffy & Sons, Inc. and Delicious Bite, LLC as long term tenants in the building. This building is centrally located within 1.5 miles from the Route 30 Bypass with easy access to Routes 100, 322 and 202."

25,000 SF of Leasing Activity Brings Occupancy of South Broad Office Tower to 96%

"230 South Broad Street, a 22-story historic office tower prominently located in the heart of Philadelphia s Avenue of the Arts, has recently experienced a flurry of leasing activity resulting in a 96% occupancy rate. The four renewals, including one expansion, and five new tenants, including a café on the ground floor, total 24,614 SF.

* PNC Bank has signed a long term lease renewal for its ground floor bank branch, (on the corner of Broad & Locust Streets), and office suite consisting of 2,878 SF.

* Philadelphia Futures, a nonprofit organization that prepares students from low-income families to enter and succeed in college, has renewed its 4,250 SF lease.

* In another renewal, Pasquarella, Kunnel & Pomo, PKP, a personal injury law firm, decided to remain in its 4,128 SF, 19th floor suite.

* In the building s newest renewal/expansion, Perspective Consulting is now leasing 2,179 SF.

* Tuscany Café has opened its third Center City location in a ground floor suite of 230 South Broad, adding a great amenity to the building.

* ABM Industries Incorporated, one of the largest facilities services contractors in the United States, has signed a new lease for 2,743 SF in a relocation from 1528 Walnut Street.

* The Law Firm of Todd M. Berk, Esq. has entered into a new long term lease, taking 3,701 SF in a relocation from 1429 Walnut Street.

* Philadelphia International Records, led by Kenny Gamble and Leon Huff, the legendary producers of Sound of Philadelphia, were forced to leave its 309 South Broad Street home of over 40 years due to a fire and has leased 2,682 square foot lease in the building.

* In another new lease, DelCasale Inc., a court reporting company, has signed for 1,815 square feet.

230 South Broad Street is a 215,000 SF, 22-story office building located on the Northwest corner of Broad and Locust Streets. The historic building is at the center of the Avenue of the Arts, offering fabulous views looking South and East over the Academy of Music. The building features direct access to The Bellevue parking garage and Sporting Club, and contains a PNC Bank Branch, the upscale seafood restaurant, Estia, and the recently opened Tuscany Café on the ground floor."

Habitat for Humanity of Montgomery County, Inc. Acquires 19,861 SF Flex Building in Norristown

"Habitat for Humanity of Montgomery County, Inc. has purchased a 19,861 SF flex building at 533 Foundry Road in Norristown. Sale price of the property was $1,210,000.

Habitat for Humanity Montgomery County, Pennsylvania is a non-profit, ecumenical Christian housing ministry that seeks to eliminate poverty housing in our country. According to their website, "Their mission is to build simple, decent houses in partnership with people from all walks of life."

Built in 1973 and renovated in 2006, 533 Foundry Road is situated in the West Norriton Industrial Park and is a one-story flex building containing a total of 19,861 SF of flex space. The property features private offices, powder rooms, conference room, assembly facilities and a warehouse. This building has a new roof and contains 3 phase 120/208 volt primary power with a 1,200 amp main service."

WorldGate makes a move within Trevose, PA

"Tiny WorldGate Communications Inc., maker of video phones, will move its operations but remain in Trevose.

According to a filing with the Securities and Exchange Commission, WorldGate will lease 18,713 square feet in the Horizon Corporate Center. Its current 17,000-square-foot offices are about a mile away at 3190 Tremont Ave.

The new space will cost more, despite an initial five-month abatement in rent. The basic rent will be $24 per square foot, up from $7.06 per square foot for its current location, according to regulatory filings.

So while WorldGate spent about $250,000 on total rent expense in 2008, the new lease calls for the company to spend $449,112 on its initial annual base rent.

WorldGate, which was rescued by a North Carolina telecommunications reseller a year ago, said it expected to make the move in August."

Friday, March 26, 2010

A bright sign: Some RE firms get financing

"Signs have emerged in recent weeks that money is headed back into commercial real estate in Philadelphia as properties and companies were able to arrange the financial infusions they sought.

The transactions range from mega to small, and point to a subdued return of capital to the market.

For example, Pennsylvania Real Estate Investment Trust closed on a $670 million loan and line of credit and Berkadia Commercial Mortgage in Horsham helped refinance $17.5 million on a shopping center in Northeast Philadelphia and $3 million for an industrial building in Delaware County. The owner of 1601 Market St. managed to line up a $61 million loan for the Center City office building, and Keystone Property Group refinanced $53.5 million on an office complex through one of the first commercial mortgage-backed securities (CMBS) deals to get done in two years.

“We’re seeing a lot of lenders who were active on the capital market side come back in if they didn’t get out or go out of business,” said Matt Pestronk, managing director at Ackman-Ziff Real Estate Group, which helped arranged the Keystone Property transaction. “A lot of people see the world isn’t coming to an end. People are making loans but on things they are able to live with.”

That means stable properties in good locations and little to no vacancy exposure.

Northmarq Capital, a real estate investment banking firm, has seen an uptick in activity with most of its refinancings and smaller transactions, said M. Walter D’Alessio, vice chairman of the company.

“Generally speaking, this has been a pretty attractive turnaround year for us,” D’Alessio said, noting the dearth of deals during the past two years. “There’s more optimism.”

While there may be more confidence in the market, these deals aren’t easy to get done. Keystone’s deal took five months to close. PREIT’s got done but with stricter terms than the company had before.

For example, what was once an unsecured credit facility has now became secured, and the Philadelphia company that owns regional shopping malls must make $33 million payments on its borrowings each year for the next three years. Where the company previously had more term loan and less revolving credit, that also changed.

“We did extraordinarily well and have the financial flexibility to weather this stormy market,” said Ed Glickman, president of PREIT.

Glickman attributed the company’s ability to line up such a large transaction to its longstanding relationships with its lenders and PREIT’s track record.

“It’s better to stay with and support the borrower than end up with foreclosed assets, especially when the markets are illiquid as they are today,” he said.

While PREIT and the others were able to refinance, not everyone is as successful.

Orleans Homebuilders Inc. voluntarily filed March 1 for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in Delaware, after failing to successfully negotiate an extension on a $350 million line of credit. And just because Keystone Property managed to get a CMBS deal doesn’t mean bond financing is back to where it was before the recession.

“I think it will come back slowly, but it’s going to be baby steps,” said Brad Krouse, who heads the real estate department at Klehr Harrison law firm and was involved in the transaction. “It’s not going to come back the way it was. The world has changed a bit.”

Developer Dranoff building on past success

"With his 777 South Broad Street project making its debut yesterday, it was to be expected that developer Carl Dranoff would have Center City on his mind.

But more condos in an already-saturated market? In Camden?

"I've already got 700 names on a waiting list - many Victor renters who want to own - and the market will be different when Radio Lofts opens in two years," Dranoff said.

Radio Lofts is a 10-story, 86-unit condo venture Dranoff Properties Inc. has planned near the Camden waterfront, a stone's throw from the Victor, the 341-unit rental project crafted six years ago from the old Victor Talking Machine Co. cabinet factory.

Crews are doing environmental-remediation work inside the 154,000-square-foot industrial building, to meet state requirements for residential occupancy. Dranoff received $40 million in financing necessary for the project late last year.

The work should be done by September, said Dranoff, 62. He expects the New Jersey Department of Environmental Protection permit by year's end, with construction on Radio Lofts to start in 2011.

It's another in a growing list - six residential and one commercial (World Cafe Live/WXPN studios) - of "calculated risks" that Dranoff, a Philadelphia native, has embraced.

When you add them up, the cost of Dranoff Properties' projects in the Philadelphia region since 1999 is close to $510 million, and he has added more than 1,200 high-end housing units to the market, with rental and for-purchase ventures rolling to completion through the recession and its tight-credit issues.

"Carl has created interesting real estate in locations that many people did not consider," said one of Dranoff's more formidable Center City competitors, Realtor/developer Allan Domb. "His developments have changed and impacted for the positive the neighborhoods he has touched."

Dranoff has figured out how to do business in one tough town for developers.

"At first glance, you'd have to wonder why anybody would want to be a home builder in Philadelphia," said economist Kevin Gillen, vice president of Econsult Corp. "Our construction costs, taxes, and regulations are among the most burdensome of any U.S. city, while our house prices, rents, and incomes are among the lowest. Unions and their work rules can be both costly and inflexible. The permitting and zoning-variance process can be both time-consuming and confusing."

Once a builder learns how to navigate Licenses and Inspection requirements successfully, win a neighborhood's support, and design a project that comes in at a reasonable cost, Gillen said, he has a template for success here that can be repeated for future projects.

Dranoff's 777 South Broad Street originally was to have been condos, a midrise version of his high-rise and first for-sale project, Symphony House, a few blocks northwest on Broad Street.

But when the condo market soured with the economy in 2007, the $80 million project, designed by JKR Partners, became high-end apartments with rents starting at $2,100 a month.

It was easier to make that shift before construction began in 2008 than after, as Dranoff did with his condo-turned-rental Venice Lofts in Manayunk.

"It was like turning a battleship around in a river," Dranoff said. "It was a hard call. We had many agreements of sale in place and had to buy two units back. We were lucky that everyone seemed to understand."

What makes 777 distinctive - other than its "eco-consciousness" and a huge rooftop Sky Deck - is that it was started and completed during the economic downturn. Other projects have struggled as financing has dried up.

It wasn't all that easy to come up with the $80 million in financing he needed for 777, Dranoff said, even though he tends to pay off his construction loans less than a year after a project is finished, instead of over the seven-year term.

"It's given me a lot more credibility with banks," he said, acknowledging that lenders still don't let go of money easily.

And although he won't say how much, Dranoff put a lot of his own skin (equity, that is) in the game to get 777 built the way he wanted, even as high-end apartments.

"I put more money into this instead of less," he said.

Symphony House and 777 were new construction, yet Dranoff said he tried to create the same kind of loft feel that his rehabs - Locust on the Park, Left Bank, the Victor, and Venice Lofts - have, because tenants and buyers seem to like it.

"It's a continuation of everything I've done before," he said, the last 13 years in Center City and Camden by himself and, in the 1980s, in Old City with Steve Solms as Historic Landmarks for Living.

"It doesn't end with the end of construction," Dranoff said, "because we learn new things that we introduce into old buildings - hospitality suites, for example. That's the advantage of building-owning-managing and being small and focused on this area.

"We're nimble," he said. "Our left hand always knows what the right hand is doing."

Over the next year or so, both hands will be busy.

Radio Lofts, with the Victor, will form the gateway to the $500 million Cooper's Crossing on the Camden waterfront, which will feature 1,500 residential units, as well as retail and office space.

Dranoff's $190 million Two Center Street project in Newark, across from the New Jersey Performing Arts Center, will be a 40-story, 328-unit rental building. His Ardmore Station will be a $180 million, 335-unit rental project that also will create a rail station.

And in Center City? "We're committed to the Avenue of the Arts," Dranoff said, adding that he was looking at "two or three sites" for the next project. He wouldn't say where because it could boost land prices.

What makes a builder successful here, Econsult's Gillen said, is "you have to be shrewd, patient, persistent, realistic, but most of all, local,"

Dranoff knows his market well, it seems."

CVS Plaza Changes Hands for $3M

"A local investor acquired the CVS Plaza in Langhorne, PA, from Goodman Properties, for $3.06 million, or about $212 per square foot. The 14,410-square-foot retail plaza delivered in 1991 in Bucks County. It is 100 percent leased, with CVS as the anchor tenant."

Monday, March 22, 2010

$23 million Switchville Crossing Project-Abington

"Duke Real Estate Partners, an affiliate of Revere Suburban Realty Corp., is moving forward with its $23 million Switchville Crossing project at Highland Avenue and Wharton Road in Abington.

The development comes after four years of back-and-forth with the eastern Montgomery County community and township that ended up being a productive exercise for Stan Casacio, principal at Duke Real Estate. In fact, Casacio was so encouraged by the process that he believes a similar approach could be used not only in every community facing development issues but on a national level in Washington to resolve problems on both sides of the isle.

“We planned a supermarket there originally but clearly a majority of the neighbors didn’t want it,” Casacio said.

At that point, Casacio said his company had to decide whether to push the grocery store concept through without support of the community or take another approach — listen to what the neighbors would like and go from there.

Artist's rendering of the LA Fitness at Switchville Crossing
“We hunkered down and we had ideas that ran the gamut and we focused down on a concept,” he said. “I think it wound up being a better project. It wasn’t the easiest process but we were able to get through stuff and we came out pretty well with it.”

Five years after buying the property and putting the community’s ideas on paper, Duke Real Estate broke ground on Switchville Crossing, named not only for the numerous train switches that once ran through that part of Montgomery County but also for “switching” of ideas that came together to help formthe project from both the community and township.

Switchville Crossing will have a 42,000-square-foot LA Fitness, which is scheduled to be completed by fall 2011. Duke Real Estate received financing for this portion of the development from Wilmington Trust but not after putting up strong guarantees and a lot of cash, Casacio said.

“Banks just aren’t lending today,” he said.

The second phase will be a three-story, 40,470-square-foot office building of which about 7,000 square feet will be ground level retail and banking space. The structure will be a medical office building, and Casacio hopes to attract tenants including hospital-affiliated operations or even major medical groups.

When the MOB will be ready for groundbreaking — and a construction loan — depends on the quality of tenants who sign on as well as a significant amount of pre-leasing. A 3,000-square-foot bank pad is also available.

The nearly 10-acre site has a 100,000-square-foot building constructed in 1930 that was originally owned by Philadelphia Electric. In 1968, the building was sold to Standard Pressed Steel and in 1971, it was bought by Willard Inc., an engineering firm. The building stood vacant beginning in 2002, and Duke bought it in 2005."

Saturday, March 20, 2010

Retail centers struggle

I spotlighted the Swedesford Plaza going into receivership last year but it looks like the defaults are spreading.

"When Wharton Realty Group bought Swedesford Plaza in June 2007 for $40.5 million, the shopping center was bustling with activity as conspicuous consumers shopped for flat-screen televisions, digital cameras and dinner out at restaurants.

Now, the 152,601-square-foot center off Swedesford Road in Berwyn is being foreclosed upon. Of the 60 commercial properties throughout the region that are delinquent or facing other loan issues, a third are retail centers such as Swedesford Plaza, according to recent data from Trepp, a New York research firm that tracks the commercial real estate and commercial mortgage-backed securities industry.

Of those centers with troubled loans, some have been foreclosed upon, taken over by the lender or have delinquent loans in special servicing. The situation shows how difficult the retail sector has become as consumers pull back spending, landlords struggle to fill vacancies, and shopping centers built during the commercial real estate boom cannibalize each other.

In the case of Swedesford Plaza, the property lost its biggest tenant — Circuit City in February 2009 when it liquidated. The retailer had occupied 65,312 square feet, and about a month after it liquidated, the $35.1 million loan on the property was shipped to a special servicer. The Circuit City space is still vacant. With the vacancy and other problems, the center’s appraisal amount was reduced in February by $14.4 million.

Vacancy issues have bedeviled retail centers during the recession, said director of investment sales at Fameco and co-chair of its distressed asset group. Retail bankruptcies, such as with Circuit City and Linens ’N Things, have hurt centers. Few retailers are stepping in to backfill the empty space.

“It’s the new math of real estate,” he said. “You have lower occupancy, less income coming in, lower rents, higher loan-to-value if you’re trying to refinance, higher interest rates, and that’s why properties have struggled.”

Swedesford Plaza isn’t alone. Joe Grasso has been working with a special servicer, since November 2008 to refinance a $32 million loan on the Pavilion at Lansdale. About four years ago, Grasso pumped $30 million of borrowed money into redeveloping the 140,000-square-foot center off South Broad Street in Lansdale. The loan is delinquent.

“Values when we were redeveloping it to now are two different worlds,” Grasso said. Some tenants have been slow to pay rents, the grocery store is struggling and some vacancies have popped up, he said. Despite the challenges, Grasso is confident the loan will be successfully renegotiated. “We will work it out,” he said.

So far, seven properties haven’t managed to work things out and have either been foreclosed or the lender has taken the property back, as in the case of Pottstown Plaza. The 161,727-square-foot center was taken over by its lender in January, according to Trepp data.

“They lost Giant to Upland Square, which is a 650,000-square-foot power center,” said Jonathan Rome. “You had an asset doing fine in its day and lost its anchor to a competing project across the way that is the pretty child on the block.”

Garden State Pavilion is another site that has floundered amid competition, according to Rome. The 257,353-square-foot center was constructed in 1999 before Market Place at Garden State Park was built just a stone’s throw away. The new center attracted one of the Pavilion’s anchors, Home Depot, as well as its customers. With a $26 million mortgage left unpaid and delinquent, the loan was foreclosed upon.

Once a property is foreclosed on, the special servicer will seek to try to fill vacancies and operate it as an owner would in hopes to eventually sell it, usually for significantly less than original loan value.

Friday, March 19, 2010

Hagen Construction Sells Industrial Bldg. for $1.4M

"Hagen Construction sold 1979 Old Bristol Pike in Morrisville, PA, to a private user for $1.43 million, or $192 per square foot.

The property features a 7,440-square-foot expandable industrial building and a two-story, 1,440-square-foot office space. The facility was built in 2002 on 13.28 acres."

Groundbreaking set for Coatesville Riverwalk Project

"The eagerly-anticipated Riverwalk Project in Coatesville will move closer to reality this morning.

A ground-breaking ceremony will begin at 10 a.m. in Gateway Park at First Avenue and Lincoln Highway. Following remarks by city, county and state officials, participants will cross the street for the requisite earth-moving at the project entrance.

The project - on and off the drawing board since at least 2003 - has been viewed as a step toward revitalization for the struggling former steel mecca. Home to about 11,600 residents, Coatesville has battled multiple obstacles to effecting a turnaround in recent years, including a high poverty rate and a 14-month spate of arsons in 2008 and 2009 that terrorized residents.

Funds for the walking/biking trail that will meander along the banks of the Brandywine Creek were obtained from county and state grants, city officials said. The $1.25 million project will be constructed in three phases, officials said.

Phase One, which has been bid to James R. Kenney Excavating and Paving, Inc. of Collegeville, consists of two parts. The first part will cover the area from Lincoln Highway north to the Valley Township border; the second part, which lies within Valley Township, will continue to Glencrest Avenue.

In the next two phases, officials hope to extend the walkway to Route 340, a goal that will require easements and additional funding, officials said."

Thursday, March 18, 2010

Hankowsky to be next Chamber chairman

"William P. Hankowsky, chairman and CEO of Liberty Property Trust, has been selected to serve as the next chairman of the Greater Philadelphia Chamber of Commerce.

Hankowsky, 59, will take over from current board chair David L. Cohen, executive vice president of Comcast Corp., at the chamber's annual meeting in October.

"Bill brings an impressive record of private and public-sector experience to his position as a volunteer leader of the Chamber," Rob Wonderling, president and CEO of the chamber, said in a statement.

Hankowsky has led Liberty since 2002. Liberty, which was founded by the late Willard Rouse III, is one of the nation's largest real estate investment trusts.

Before that, Hankowsky held a variety of senior management positions in both the private and public sector, including president of the Philadelphia Industrial Development Corp. (PIDC) for 11 years.

During his time at the PIDC, Hankowsky managed 11 industrial parks, operated 20 loan programs, and coordinated major projects including the building of the new convention center and the city's two sports stadiums, Lincoln Financial Field and Citizens Bank Park. He also was central to the effort to bring the Norwegian shipbuilder, Kvaerner, to Philadelphia.

"I'm happy to do it and honored that they asked me to do it," Hankowsky said in an interview. "I've worked in the region a long time, 35 years now. I've worked in New Jersey and Philadelphia; I've worked for five mayors; I've worked in both the private and public sectors.

"I think this is an opportunity to apply some of my gray hair or lack of it and try to help Rob and board to keep going forward."

Wednesday, March 17, 2010

Developer sells property, backs off plans in Norristown

Another blow to Norristown's redevelopment.

"Developer Brian O'Neill's promise to lead an ambitious revitalization of Norristown's depressed Schuylkill riverfront came to an official end yesterday with an agreement to sell his only property there to the Montgomery County Redevelopment Authority.

O'Neill said not to count out a Norristown revival, or his role in it.

"It is the next great river town to be redeveloped," O'Neill predicted in an interview later in the day - something he has said often of the county seat in recent years. "I hope I'm a huge player."

But for now, he is exiting the waterfront, where not long ago he sparked big hopes. Using dazzling color sketches and his trademark effusive salesmanship, O'Neill hooked a troubled town on the idea of luxury condos, cafes, shops, a multiplex, even a minor-league ballpark sprouting from a 365-acre redevelopment zone.

That area included 60 acres along the Schuylkill and Norristown's commercial corridor, Main Street.

O'Neill, who heads O'Neill Properties Group L.P. of King of Prussia, was designated the preferred redeveloper in November 2000 by the Redevelopment Authority and the borough, which would have put him first in line for public funding for the revitalization.

Instead, public funds are being used to buy out his riverside holdings.

In the deal approved yesterday by the authority's executive board, $3.7 million in state economic-development and infrastructure-improvement funds approved for O'Neill's use will go to buy nearly 13 acres he bought between 1988 and 2003 for $930,500, according to county property records.

The land, at 500, 600, and 700 E. Washington St., includes the former Nicolet asbestos-manufacturing plant. O'Neill had secured state funding for demolition and property cleanup, but he had never amassed the private money necessary to proceed with any significant work there, said Jerry Nugent, the Redevelopment Authority's executive director.

The plan now is to use the properties for a new sewage-treatment plant, the details and financing of which are still being worked out. The plant would replace a malfunctioning facility nearby, long considered an obstacle to riverfront redevelopment.

Future revitalization efforts would be focused on the riverfront west of the new plant, estimated to cost $150 million and be at least eight years from completion.

"This is an enormous project of great importance," Jay Ochroch, Redevelopment Authority vice chairman, said at yesterday's meeting.

Dave Forrest, Norristown's borough manager since 2007, echoed that sentiment in an interview, while indicating that many more steps still need to be taken.

"We need to keep moving," Forrest said.

O'Neill was not present for the five-minute vote, the culmination of a deal Redevelopment Authority officials said had been in the works since October and was not likely to translate into meaningful revitalization for at least 10 years.

Said an undeterred Paul Bartle, the authority's chairman: "Anything worthwhile takes time."

In an interview, O'Neill said he agreed to sell because "I want to help" Norristown resolve hindrances to its revitalization. He identified those as the sewage-treatment plant, in part nearly 70 years old, and the lack of a direct connection from downtown to the Pennsylvania Turnpike.

The latter is considered by many to be the most critical component of a Norristown rebirth, just as completion of the Blue Route was to the transformation of Conshohocken and West Conshohocken. Work on the $140 million interchange is expected to begin in 2013 and conclude in 2016, said Steve Nelson, policy director for Montgomery County and a proponent of the project.

"Brian is full of vision and energy, but you've got to have that actual physical improvement for anything to happen," Nelson said.

Also working against Norristown's revival has been its long history of embarrassing legal problems, including former Mayor Ted LeBlanc's conviction in April 2006 on bribery, bank fraud, and tax-evasion charges.

A month later, former borough manager Anthony Biondi, who resigned in 2004 under the shadow of a federal investigation, pleaded guilty to municipal corruption and tax evasion.

"Those kinds of things set us back," O'Neill said.

But he also was slowed because assembling properties in the redevelopment zone became difficult. Emboldened by the grand vision O'Neill had for Norristown, owners of land he wanted held out for more money.

"I think he oversold his vision and people saw dollar signs," said Nugent. "Some of the owners down there still have stars in their eyes because of Brian's big pitch."

By his count, O'Neill still owns nine properties throughout downtown Norristown. Yesterday, he said he plans to buy riverfront property, but would not say when.

In the meantime, the recession has caused problems completing O'Neill's priority project in the region, the mixed-use Uptown Worthington complex along Route 202 in East Whiteland Township.

In November, Citizens Bank of Pennsylvania, the primary lender on Worthington, secured a $61 million judgment against O'Neill in Montgomery County Court for defaulting on an office-construction loan. The bank followed up with two judgments, in December and January, totaling $3 million in connection with the unfinished Horizon Corporate Center, a 101-acre office/retail/restaurant complex in Bensalem.

In January, O'Neill struck back, filing an $8 billion suit against Citizens Bank and its parent company, claiming they had breached their financial commitments to him."

Tuesday, March 16, 2010

Recent Leases Signed in Wayne, Chester Springs, Exton and Folcroft, PA

"Town Center at Wayne is now 80 percent leased up after signing PNC Bank to 9,161 square feet.

Located at 200 W. Lancaster Ave. in Wayne, the new 42,000-square-foot center’s other tenants include Stillwater Asset Management, Charles Schwab, Boathouse Capital and the renowned White Dog Café. Just 2,250 square feet of space remains available after 35,500 square feet of transactions have been wrapped up in the last 12 months. Eastern Property Group is the owner ...

Two industrial leases were recently sealed up. Konecranes of Finland leased 11,000 square feet at the Eaglepoint Industrial Center at 2145 Ticonderoga Blvd. in Chester Springs. The facility, just off Route 100 and the Pennsylvania Turnpike, will house both regional offices and a service center for Konecranes, which provides manufacturing, installation and servicing of crane and lifting equipment. The company is consolidating two other firms — Morris Material Handling and P&H Crane — that are now under the Konecranes umbrella. Eaglepoint Industrial Center totals 258,000 square feet. It is a joint venture between J. Loew & Associates Inc. and Kahn Development Co.

In another deal, MedEx Logistics Inc. leased 10,500 square feet of distribution space at 405 Kaiser Drive in the Folcroft West Industrial Park in Folcroft. MedEx subleased the space from Staples Inc. and its Corporate Express division. Superior Plus Energy Services took 8,456 square feet of office space at 224 Valley Creek Blvd. in Exton from Rubenstein Partners.

Sunday, March 14, 2010

CHOP assessing RE options

Great article about Children's Hospital of Philadelphia in this week's PBJ.

"The Children’s Hospital of Philadelphia has begun an extensive review of its real estate needs in Philadelphia and the suburbs that could mean constructing new buildings and expanding its regional footprint.

It will consider buying properties, constructing anew, relocating or finding space to add to existing locations. Its decisions could significantly affect Philadelphia and the King of Prussia area where it currently maintains outpatient medical facilities. It is not considering relocating its main hospital.

In Philadelphia, CHOP is seeking 400,000 square feet of office space and possibly up to 500,000. The space would accommodate its corporate administrative functions and clinical research department. Those operations are currently in 226,000 square feet at 3535 Market St. in University City and 174,000 in the Wanamaker building in the Central Business District.

The hospital has also asked real estate developers to offer proposals to construct a 400,000-square-foot office building at the former John F. Kennedy Center on Schuylkill Avenue in Philadelphia. Two months ago, CHOP bought the 700,000-square-foot facility, which is basically “deteriorating shell space” and would potentially be razed to make room for a modern building, said John McDonough, vice president of facilities at CHOP.

In the King of Prussia area, CHOP is looking for 100,000 to 125,000 square feet of space with room to expand.

“It’s important we have the ability to grow,” McDonough said. “No matter what we start with, it would be important to have a site where we could grow.”

The hospital currently occupies a total of 70,000 square feet between two buildings in King of Prussia for its specialty-care operations. The two buildings — one on Mall Boulevard and the other on Pulaski Drive — are limited in their ability to expand. CHOP has outgrown them.

Ideally, the hospital would like to stay in the King of Prussia area because of highway access. However, it will consider sites farther out.

One option would be to develop new facilities on the former 126-acre Valley Forge Golf Course along North Gulph Road where Realen Properties had envisioned a mega-mixed-use residential, retail and entertainment development called the Village at Valley Forge. CHOP could kick off the development, which has been stalled because of the recession and changes in the retail industry. That property would also give it plenty of extra ground for future growth.

CHOP has plenty of options downtown.

“Like any large back-office user that draws from the Greater Philadelphia region, there’s a desire for access to public transit, there’s a desire from some for closer proximity to its main campus,” Garvey said. “That’s not a ‘must have’ but a ‘nice to have.’ At the end of the day, the goal is to get a good solution that’s economically responsible and meets their needs.”

The hospital’s main campus is at 34th Street and Civic Center Boulevard in University City. There it has a 430-bed inpatient facility as well as a 70-bed intensive care unit for newborns and infants, cardiac care and radiology. It outgrew its space at 3535 Market about five years ago and leased space at the Wanamaker building at 100 Penn Square East.

During the past decade, CHOP has invested or committed to spend about $2 billion on building projects in West Philadelphia to provide more treatment space for patient care and more laboratory space for researchers. Projects have included modernizing the pediatric hospital’s facade, constructing the new patient care building and, most recently, opening the $500 million Colket Translation Research Building at the former Civic Center property in October.

Dr. Steven M. Altschuler, CHOP’s president and CEO, said in previous interviews the expansion efforts are a response to the hospital caring for more patients from outside the region, and outside the country, who come to CHOP with complex medical conditions.

Additionally, Altschuler said, the hospital needed more room for its researchers. In 2002, for example, CHOP spent $50 million to add 10 floors to the Leonard and Madlyn Abramson Pediatric Research Center. In less than five years that space was fully occupied. The Colket building, which will be completed in June, will start out at 11 floors, but have the capability to go to 23.

CHOP’s expansion activities have not been limited to West Philadelphia. Its network of pediatric and adolescent care practice sites, formerly known as Kids First centers, has grown to 28 locations. It also has established specialty-care centers that include outpatient surgery in Exton, Chalfont and Voorhees, N.J., and a pediatric imaging center in King of Prussia.

Aside from its growth and continued expectations to grow, its leases downtown and in King of Prussia come due between 2012-13, prompting CHOP to initiate an assessment of its real estate needs.

While renewing in space where it currently occupies, relocating, buying a building if one was suitable, or constructing 400,000 square feet on the JFK site are all in the mix, CHOP could also be an anchor tenant for Brandywine Realty Trust’s Cira South or other Cira buildings, setting in motion the construction of more office buildings in and around 30th Street Station.

“We haven’t ruled anything out yet,” McDonough added that “all options” will be explored. Depending on its growth, CHOP could need more than 500,000 square feet for its administrative and clinical research departments in just five years.

It’s too early to peg how much CHOP will spend since the evaluation isn’t complete and no decisions have been made. The hospital is prepared to make a massive financial commitment to ensure it meets its growth needs. It expects to narrow its options and have a better idea of what it will do by about June.

Monday, March 8, 2010

Two solar power companies leased space in the region

Two solar power companies recently leased space in the region. Astrum Solar, a designer and seller of solar panel systems for houses, leased 5,976 square feet of flex space at 705 General Washington Ave. in Norristown. This is a new office location for Astrum Solar. The other company, Aztec Solar Power, subleased a 9,088 square feet at 701 Lee Blvd. in Chesterbrook Corporate Center. Aztec Solar Power is a residential and commercial solar products and work and it had been in about 3,500 square feet in King of Prussia.

Nancy Ezold, an attorney, renewed her lease at One Belmont Avenue in Bala Cynwyd for 2,457 square feet. Catholic Medical Association signed a 1,187 square foot at 29 Bala Ave. in Bala Cynwyd, Pa. The company will be relocating its office from Lancaster Avenue in Wynnewood.

Saturday, March 6, 2010

New Leases and Renewals at Spring Mill, Conshohocken

"Spring Mill Corporate Center in Conshohocken has arranged a slew of leases totaling 178,056 square feet and is currently in negotiations with tenants for an additional 30,000 square feet.

New leases include: Connolly Consulting, an accounting firm, which signed on for 17,993 square feet; MedTrack Inc., a biomedical corporate intelligence database, took 1,849 square feet; and CXN, a direct marketing specialist company, leased 1,400 square feet.

In other deals, National Label Co. signed a renewed a lease on 54,000 square feet, PaeTec Communications also re-upped, for 31,591 square feet, and David’s Bridal represented the largest office space renewal (20,842 square feet) among several other smaller renewals.

E-Brilliance, a technology solutions firm, Dragonfly Media Group, a medical illustration and animation studio, and Progeny Health, a neonatal-care management services company, expanded at the building at 1100 E. Hector St."

Thursday, March 4, 2010

Industrial Real Estate: A Good Investment?

Great video interview on CNBC Squawk Box this morning.

Behringer Harvard Takes Control of 1650 Arch thru Loan Purchase

Behringer Harvard purchased the first mortgage secured by 1650 Arch Street, a 553,349-square foot, 27-story office tower in Center City Philadelphia.

Behringer Harvard did not provide details of the transaction. The original loan was held in a CMBS trust and had a balance as of Jan. 31 of $42.77 million and carried an interest rate of 6.43%. The loan is scheduled to mature in August 2012.

"This investment demonstrates our continued commitment to the Philadelphia market, and to 1650 Arch Street," said Deidre Hardister, vice president of asset management for Behringer Harvard. "Since the departure of WolfBlock, the debt structure secured by 1650 Arch Street has presented challenges. Now that a Behringer Harvard entity controls the senior debt, we have the flexibility required to upgrade the property and invest capital to lease the vacant space."

Hardister was referring to tenant WolfBlock LLP voting to dissolve and cease its law practice. WolfBlock occupied more than 144,000 square feet.

"We plan to make significant capital improvements to 1650 Arch Street this year, including lobby and exterior renovations and upgrades to the elevator and mechanical systems," Hardister said. "The property has available for lease approximately 176,000 contiguous square feet of office space."

Harleysville National Bank Branch Sells for $1.4M

"Bank Realty LP sold the Harleysville National Bank building in Coatesville, PA, to private investors for $1.44 million, or $118 per square foot.

The two-story, 12,200-square-foot former Willow Financial building at 112-114 E. Lincoln Highway delivered in 1920. Harleysville National Bank is subject to a 20-year bonded absolute net lease with structured rent increases every five years."

Lakeview Shopping Centre Trades for $23.5M

"One Liberty Properties Inc. has acquired the Lakeview Shopping Centre in Royersford, PA, from R.J. Waters & Associates for $23.5 million or about $121 per square foot.

The 194,451-square-foot shopping center at 947 S. Township Line Road was built in 2002 on 33 acres. The center is anchored by Giant and Kohl's, and features a number of other tenants including Blockbusters, Marshalls and Lakeview Cleaners. It was 100 percent occupied at the time of sale."

Brandywine Realty's Market View

These are encouraging signs from Jerry Sweeney (unless your market is South Jersey).

"Brandywine Realty Trust offered during its recent fourth-quarter conference call some glimpses into their view of how the office market is faring and what’s ahead.

What would the real estate investment trust buy in Center City? Trophy towers. 2000 Market is not a building it would have been interested in because it’s older and has some other issues, said Jerry Sweeney, CEO of Brandywine (NYSE:BDN). Though it will only consider top tier towers, the company has not programmed any acquisition or joint-venture activity into its business plan for this year.

As for Cira South, the company continues to talk with several large potential prospects, but would not be in a position to start either the Walnut or the Chestnut Street Tower without having a significant pre-lease commitment. The Internal Revenue Service is expected to occupy the Post Office conversion in University City this September. Once that happens, the federal government will become Brandywine’s largest single tenant, comprising 7.2 percent of its annual base rents.

South Jersey has been a challenge for Brandywine. Despite having positive absorption in South Jersey during the fourth quarter, the company expects the South Jersey office market to remain difficult for the rest of this year.

The company plans to invest about $16 million throughout the year to make capital improvements to buildings. The money will be spent on a range of upgrades including roof replacements, energy savings and sustainability initiatives, mechanical systems, public areas and building renovations. (This is expected to be a trend this year among those landlords who have strong financial footing to improve their competitive positions.)

“All of this investment is designed to take advantage of this market trough to reposition our well located properties,” Sweeney said.

In general, while overall market conditions remain challenging, Brandywine is seeing increased activity in some of its markets and believes, like Liberty Property Trust, that the market is reaching a bottom. Tenants downsizing has slowed and activity is perking up.

“So tenants are fortunately beginning to get into their cars, look at space, and when they make a decision, make that decision a little bit quicker,” Sweeney said. “Despite this there is no question that generally speaking there continues to be downward pressure on rents due to higher vacancy levels, tenant consolidations and generally lower leasing activity ...The major objective for 2010 is to lease office space, frankly nothing more complicated than that.”

The company expects rents to stay flat until job growth starts to pick up and 38 percent of the lease deals it strikes will have free rent, which is up from 27 percent last year."

Monday, March 1, 2010

Orleans Homebuilders Fails To Pay Off Revolving Credit Loan

"Orleans Homebuilders Inc. in Bensalem, PA, failed to obtain a maturity extension on its revolving credit loan agreement. Any temporary or long-term modification required the consent of 17 bank lenders.

As a result, the company is now in default and said it does not have sufficient funds to repay the amounts outstanding.

The company said it would consider it options including lining up new or modified funding sources; an in-court or out-of-court restructuring; a sale or recapitalization of the company; as well as continuing modification negotiations."

Renewals and New Deals

"Montgomery McCracken Walker and Rhoads reupped its lease on 17,616 square feet at 457 Haddonfield Road in Cherry Hill. The building is owned by Brandywine Realty Trust … Endurance Real Estate Group sold a portion of 121 High Hill Road, a two-building industrial complex in Woolwich, N.J., for $3.5 million to Diversified Foam of Pennsauken, N.J. The company will be relocating to the new facility. The sale was for one of the buildings, which was 107,570-square-feet. The complex totals 169,290 square feet. Endurance will continue to own the other 61,783-square-foot building …

Bobby’s Burger Palace will open this spring in 3,420 square feet on the first floor of the Radian, an apartment complex in the University City neighborhood of Philadelphia. The restaurant concept, which serves gourmet hamburgers, is the brainchild of Bobby Flay, a celebrity chef."