Thursday, January 7, 2016

Brandywine Sells More Properties in Texas and PA

by Steve Lubetkin,
Brandywine Realty Trust, continuing with its previously announced strategy of selling non-core properties, says it sold a 137-room hotel in Conshohocken, PA, not far from its corporate headquarters in Radnor, and two office properties in Austin, TX.

Last month, in separate transactions, as reported by, Brandywine announced the sale of Cira Square, its redevelopment of the former main US Post Office building in Philadelphia, to Korean Investment Management Co., a Korean property investment firm, the refinancing of One Commerce Square in Philadelphia, and the sale of six office properties in nearby Mount Laurel, NJ.

In the most recent announcement, Brandywine sold its Encino Trace, a recently completed development of two office properties in Austin, TX, to an existing joint venture between Brandywine and DRA Advisors. Brandywine says it retains 50 percent ownership in the joint venture.  The sale values the project at $91.3 million, or $285 per square foot, at stabilization.  The transaction closed on December 31, 2015.  At the time of sale, Brandywine had incurred project costs totaling $76.7 million. The joint venture will fund the remaining costs, Brandywine says.  The two properties have 320,000 square feet of space. Encino Trace I is 100 percent leased and Encino Trace II is 17 percent leased.  After closing costs and transaction costs, Brandywine says it will receive net proceeds of $35.9 million.

Encino Trace I was financed with a $30 million five-year first mortgage at 185 basis points over the London Inter-Bank Offered Rate, Brandywine also noted.  After stabilizing Encino Trace II during 2016 and refinancing the property with a similar mortgage, the REIT says it expects its share of the mortgage proceeds to total $14.3 million.

Brandywine also sold its 50 percent interest in The Residence Inn Tower Bridge, a 137-room hotel located in Conshohocken, PA.  The sale price was $26.5 million ($193,430 per room key) and closed on December 30, 2015.  After debt repayment, transaction costs and holdbacks, Brandywine says it will net $6.1 million from the transaction.

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