Friday, June 22, 2012

Center City buildings meet a variety of different fates

by Natalie Kostelni
"Several Center City office buildings that were up for sale last year have met different fates.
Most have not sold and managed to refinance their loans. The exception is Two Penn Center.
Two Penn Center, which was briefly taken off of the market, is now up for sale again and under agreement, according to sources in the real estate market familiar with the transaction. A deal is under negotiation that, if successful, would transfer control of the office tower to ASI, a Philadelphia company operated by Alex Schwartz.
Two Penn was the first office building to come up for sale early last year after property owners sat on the sidelines for three years without putting any significant downtown properties on the market. When the building was first on the market, a deal with ASI had been in the works but never fully materialized. Between then and now, a new $52 million loan was arranged on the building that comes due in May 2021 and a series of leases were completed that helped fill some of its vacancy. The building is occupied with a lot of smaller tenants, many of which are law firms that want to be in close proximity to the criminal justice center and City Hall.
Two Penn had been up for sale for an estimated $65 million and is expected to trade for that amount.
New York-based Crown Properties Inc. bought Two Penn, a 505,000-square-foot 20-story building at 1500 John F. Kennedy Blvd., in 1997 from a Dutch pension fund for $33.5 million. Crown had tried to sell the building in 2001, during another recession, but took it off the market when a deal never happened.
In spring 2011, two neighboring properties, the Curtis Center and the Public Ledger Building, went up for sale. The Public Ledger has since been pulled and its loan in special servicing.
The Curtis Center had been under agreement by an investor and a deal was expected to be wrapped up by year end, according to people familiar with the situation. When it became apparent the transaction wasn’t going to get completed, Apollo Real Estate, which controls the property, decided to try to get the loan on the property refinanced. A $95 million permanent loan was lined up. JP Morgan provided the floating-rate loan and Jones Lang LaSalle secured it."
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