Tuesday, September 27, 2011

1700 Market Street sells for $143.5M

"The Chicago-based Pearlmark Real Estate Partners said Monday that they've closed the sale of Center City's 1700 Market Street office tower to Brooklyn-based property investor David Werner and his partners at a price of $143.5 million, or $170 a square foot. The property includes a 761-car garage.

The sale price is a little less than the $178 per square foot that landlord Brandywine Property Trust paid in 2010 for the Commerce Square complex across the street. Space at 1700, where major tenants include Deloitte and Independence Blue Cross, now rents for about $25 per square foot. Asking rents at Commerce are a few dollars higher.

The contract, negotiated in May, "closed on schedule despite a tumultuous capital market in August and September."

During the federal budget impasse, investors stopped buying mortgage-backed bonds, forcing investors to borrow from banks at higher rates.

Meridian Capital's Jonathan Stern arranged for Werner to borrow $123 million in senior mortgage and mezzanine financing through UBS.

Philadelphia office rents have been roughly flat for 20 years. But Beneville said the sale was proof that Philadelphia remained attractive: "It's a big building, there was a lot of competition from institutional U.S. and offshore investors."

Buyer Werner represents "out-of-town New York capital," said Beneville, and banker UBS is "a major institutional lender."

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