Thursday, January 23, 2020

Chicago Developer Buys Former Philadelphia Refinery in Bankruptcy Auction

Hilco Redevelopment Partners is the winning bidder of one of the oldest and largest oil refineries on the East Coast. The purchase by Hilco, a company that specializes in redeveloping industrial sites, suggests the oil refinery may soon be transformed into a logistics hub.

Hilco, based in Chicago, plans to spend $240 million to buy the Philadelphia Energy Solutions refinery, according to filings revealed Wednesday with the U.S. Bankruptcy Court for the District of Delaware. The 150-year-old refinery sits in south Philadelphia and has been closed since a fire and explosion last year. Shortly after the fire, Philadelphia Energy Solutions filed for Chapter 11 bankruptcy protection.

The refinery sale still requires approval from the U.S. Bankruptcy Court as well as creditors, according to the filings.

The property is on 1,300 acres along the Schuylkill River, providing waterway infrastructure.

Hilco has a track record of redeveloping industrial sites into logistics-focused projects. Hilco bought a former Baltimore steel mill for $72 million several years ago and transformed it into Tradepoint Atlantic, a 3,300-acre shipping and logistics industrial development with tenants such as Amazon and Home Depot, according to CoStar data.

In Chicago, Hilco is redeveloping the former Crawford Station — one of the city’s oldest power stations — into a 1 million-square-foot logistics center. The project, called Exchange 55, is expected to be completed this year.

Meanwhile, the Philadelphia Energy Solutions refinery was the largest refinery on the East Coast and processed roughly 335,000 barrels of oil per day at maximum capacity.

Demand for refined petroleum is expected to dwindle in the coming years because of increased fuel efficiency and wider use of electric and hybrid vehicles, according to a market report from IHS Markit, an industry consulting firm. The East Coast is expected to have the steepest decline in demand because of higher operating costs and competition from alternative energy, according to IHS Markit.

IHS Markit cites uncertainties related to the refinery site such as environmental conditions and being an urban location close to residential communities. About 219,700 people lived within 3 miles of the refinery site in 2017, according to the consulting firm.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.