Tuesday, June 10, 2014

Philadelphia's Curtis Center Sells for $125M

A joint venture comprised of affiliates of Keystone Property Group and Mack-Cali Realty Corporation (NYSE: CLI) have acquired the iconic Curtis Center office building at 601 Walnut St. in Philadelphia, PA from Walnut Street Capital and Apollo Global Management LLC for $125 million, or about $141 per square foot. 

Overlooking Independence Hall and Washington Square Park in the heart of Center City, the 12-story, 885,786-square-foot, 4-Star property was originally built in 1909 on 2.3 acres in Independence Square West. The asset is home to multiple tenants including various departments and government agencies under leases held by the General Services Administration (GSA). 

The new owners plan to reposition the landmark property into a world-class, mixed-use environment through repurposing 90,000 square feet of existing office space into 90 luxury rental apartments while adding an enhanced pedestrian-friendly retail aspect along the streetscape, to include new corner restaurant spaces and landscaped outdoor seating areas. The additions will complement the property's office and multifamily focus, and will round out with a capital improvement program to update the elevators, HVAC systems, roof, facade, and parking garage. 

Curtis Center was originally home to Curtis Publishing, with such titles as Ladies' Home Journal, The Saturday Evening Post, The American Home, Holiday, Jack & Jill, andCountry Gentleman. The property was last updated in the 1980's, when it underwent an $80 million renovation that restored tenant spaces, common areas, and building systems. Walnut Street Capital acquired the property in September of 2006 for $94 million, or $106 per square foot, according to CoStar data. 
See CoStar COMPS #1147723. 

"Not only is Curtis Center rich with cultural importance, but it's also perfectly aligned with our company's overarching goal to expand our regional footprint by creating exciting live-work-play spaces in dynamic markets," stated Bill Glazer, president of Keystone Property Group. "We're thrilled to have the chance to transform this icon into a vibrant mixed-use environment while maintaining the historical significance of one of Philadelphia's most recognizable buildings. Our strong relationship with Mack-Cali will enable us to leverage our collective knowledge to create truly unique tenant and resident experiences." 

This all-cash transaction is just the latest for high-profile partners Keystone and Mack-Cali, with Keystone looking to expand its focus on lifestyle centers while Mack-Cali continues to grow its multifamily portfolio. An affiliate of Keystone will manage the office and retail portions, while Roseland, a subsidiary of Mack-Cali, will design, construct, lease, and manage the new residential component. 

Mitchell E. Hersh, president and CEO of Mack-Cali, commented, "Curtis Center offers us a unique opportunity to strengthen our multifamily presence in the heart of the growing Philadelphia housing market. Through our bold conversion strategy, this building is well positioned to capitalize on the upside of one of the region's most exciting hubs for entertainment, culture and transit." 


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