Thursday, July 2, 2020

Piedmont Office Realty Trust Sells Landmark Office Tower for $360M

by Ingrid Tunberg
Independence Blue Cross has acquired the landmark, 45-story, class A, office tower at 1901 Market Street in downtown Philadelphia from the Atlanta-based REIT, Piedmont Office Realty Trust, in a $360 million transaction.

The 800,000-square-foot tower has been exclusively leased to the health insurance company, serving as its headquarters, since the property’s completion in 1989. Piedmont Office Realty Trust has owned the asset since 2003.
Selling for $450 per square foot, the transaction represents the disposition of Piedmont Office Realty Trust’s sole Philadelphia asset. As a result of the sale, 96% of the REIT’s annualized lease revenue is now generated from its seven core markets, primarily from its Sunbelt locations.

Throughout the past eight years, the office tower has undergone more than $110 million in capital improvements, including various interior renovations, a new lobby, an outdoor plaza and new mechanical systems.

“The sale of 1901 Market Street concludes a successful recycling story for Piedmont, allowing us to dispose of a long-term, 100%-leased asset in a non-strategic market where we believe the value potential during our ownership has been realized and to fully reinvest the proceeds accretively into our recent purchase of Dallas Galleria Office Towers,” said Piedmont president and CEO, C. Brent Smith. “The transaction was structured as a 1031 exchange for tax purposes; therefore, no special distribution will be required despite the nine-digit gain on the sale of 1901 Market. Overall, this transaction represents a good strategic move for the purchaser and a phenomenal outcome for our stockholders.”

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