Thursday, October 30, 2014
Inquirer Daily News

POSTED: Monday, October 27, 2014, 4:29 PM

TUESDAY UPDATE: "People in Wilmington are very open to development - on an appropriate scale," says Rob Buccini, confirming his firm, Buccini/Pollin Group, has taken over the sprawling former Bancroft Mills development site, which stretches uphill from the Brandywine north of downtown Wilmington, Del., from past owner Brian O'Neill, the King of Prussia-based developer who had hoped to put 1,400 apartments in the dramatic waterfront stone, brick and cement mills where thousands worked from the late 1800s into the 1960s. 

Philadelphia-area developers like O'Neill and Stoltz Bros., which hoped to redevelop DuPont Co. offices south of Greenville, have met strong local resistance to big plans in Delaware. How can Buccini win where O'Neill fell short? Compared to O'Neill's projections of a decade ago, "we're going to build a fraction of that," Buccini told me. "Maybe a little office. Maybe tiny retail. Wilmington is the kind of place where you do a little here, a little there." His firm already owns two nearby office buildings built on riverside factory foundations, and they're "98% leased. People like to be by the river," Buccini added.

MONDAY: Delaware's Buccini brothers -- partners in the Buccini/Pollin Group, the hotel-entertainment-apartment development group, whose projects stretch across Wilmington, Del., the Chester, Pa. waterfront, and the Washington, D.C. area -- have acquired control of the ghost city-on-the-Brandywine that is the former Bancroft Mills property in Wilmington, confirms King of Prussia-based developer Brian O'Neill. His past-due $14.8 million loan on the property went on sale earlier this year. He had hoped to build 1,400 homes there.

POSTED: Monday, October 27, 2014, 3:02 PM

"It's good discipline to face investors on a regular basis," says Bruce Van Saun, chief executive of Citizens Financial Group Inc., Rhode Island-based owner of Citizens Bank of Pennsylvania. Van Saun's bank posted higher profits from last year and faced (a few, mostly detail-oriented) questions from Wall Street bank analysts this morning for the first time as a public company CEO: Citizens sold shares in an initial public stock offering (IPO) last month. On a day bank stocks were mixed, Citizens (CFG) slipped to $22.93, down 25 cents, by mid-afternoon. The company is still controlled by Royal Bank of Scotland Group Plc, which is selling Citizens in stages. 

Sales were up, loans were up, but the net interest margin -- the difference between what Citizens pays to raise money and what it charges to lend it -- was tighter. "It's par for the course across the industry," Van Saun said. He expects borrowers are going to be refinancing their loans again and "taking a bite out of the net interest margin" this fall. He's betting analysts at Goldman Sachs are right when they predict the Federal Reserve's Fed funds rate will start moving north next fall, boosting interest income and profit margins: "It would certainly help." 

Meanwhile, Citizens keeps hiring. Its Pennsylvania branch network has shrunk a bit, to 361 offices at midyear, down from 397 ten years ago; while its Pennsylvania deposit-market share has slipped to 7.5%, from 10%, third in the state after Wells Fargo and PNC.

POSTED: Monday, October 27, 2014, 12:14 PM
Ed Snider (Photo by Mitchell Leff/Getty Images)

Ed Snider, longtime owner of the Philadelphia Flyers (NHL) and chairman of Comcast-Spectacor, says he has given $5 million to the Robert H. Smith School of Business at Snider's alma mater, the University of Maryland, to fund the Ed Snider Center for Enterprise and Markets. Billionaire chemical magnate and political donor Charles Koch is kicking in another $1 million, Maryland says in this statement (link fixed)

The center will be run by Maryland's Prof. Rajshree Agarwal , an India-born student of "innovation and technological change." The granted millions will also help fund three tenured professors, students, staff. "Truly successful businesses are moral enterprises, resulting from productivity, integrity and a sense of purpose,” Agarwal said in a statement. The Snider center will "explor(e) the institutions that affect human enterprise, thereby impacting the prosperity and wellbeing of individuals and societies.”

UPDATE: I asked Prof. Agarwal a note how scholars manage conflicts if they ever conflict with donors' ideas. Snider traces his, partly, to his reading of Ayn Rand. She wrote back: "I cannot speak for Mr. Snider and Mr. Koch regarding their views. As for myself, I have pursued research in innovation and entrepreneurship because I believe that truly successful businesses are moral enterprises, resulting from productivity, integrity and a sense of purpose. Human enterprise, when done right, is not only a personal achievement, but also benefits society by filling needs,solving problems and creating jobs."

POSTED: Monday, October 27, 2014, 10:45 AM

Brandywine Realty Trust, the Radnor company that is the dominant office landlord in Center City, says it has a partner and detailed plans to build a 29-story, 321-apartment, $140 million tower on the grassy lot it controls at 1919 Market St. in Center City. The 455,000 sq. ft. tower will include 24,000 sq. ft. of commercial space, mostly leased to Independence Blue Cross (IBC) and the CVS drugstore chain. Statement here.

Brandywine's 50-50 joint venture partner for 1919 Market is Berwyn-based LCOR CalSTRS, a successor to the former Linpro Co., which now manages property investments for the California State Teachers Retirement System. The partners arranged to borrow $88.9 million for the project, pricing the credit at Libor plus 2.25%. Equity investment is $59.2 million, split by the two partners; Brandywine's half includes the $13 million value of the land. The company projects a cash yield (rent/cost) of 7% a year (vs 8% for Brandywine's $385 million FMC office/apartment tower, and 7.6% at Brandywine's $158 million Evo apartment project, both in University City). 

In 2012, Brandywine proposed a mixed 292-apartment/ 55,000 sq ft-commercial project for the same space, with IBC as a partner, targeted to open this year. The project stalled until Brandywine found its new investor, with IBC as tenant instead of partner. The delay had the result of strengthening Brandywine at the expense of would-be competing office developers along that stretch of Market St., Timothy Monahan of broker Savills Studley told me last summer.

POSTED: Monday, October 27, 2014, 8:43 AM

Some of America's biggest retailers have disabled or refused Apple Pay, the new smartphone payment system, because they're working on a rival system, CurrentC, that cuts out the middleman -- not just Apple, but also Visa, MasterCard, American Express, Bloomberg reports here. CurrentC looks cheaper -- for merchants, at least; Apple Pay is slick, convenient -- and first to market.

"Rite-Aid, CVS, Walmart, Best-Buy and about 50 other retailers have been working on their own mobile payments system, called CurrentC. Unlike Apple Pay, which works in conjunction with Visa, Mastercard, and American Express, CurrentC cuts out the credit card networks altogether," Bloomberg reports. "The benefit to the merchants is clear: They would save the swipe fees they pay to the credit card companies now, which average about 2% of the cost of transactions." 

CurrentC, due in 2015, "is also likely to allow merchants to gather data about transactions and offer discounts and loyalty programs," as the card companies already do, but "in marked contrast to the anonymity built into Apple Pay, which has drawn concerns even from some merchants."



POSTED: Thursday, October 23, 2014, 3:02 PM

Vanguard Group, the Malvern mutual fund giant, has responded to a New York whistleblower lawsuit by former Vanguard tax lawyer David Danon with accusations of betrayal, theft and ethics violations the company says should bar him or his lawyers from bringing the complaint.

The company also offers a defense of Vanguard's "unique" legal structure, noting company officials have testified about its practices before Congress, and widely publicized its arrangements since its founding by John C. Bogle 40 years ago.

In documents made public after New York state court Judge Joan A. Madden declined Vanguard requests to keep them sealed away, the $3 trillion-asset company argues Danon "grossly betrayed" his former employer, violated confidentiality agreements and broke state bar association ethics rules when he illegally "stole hundred of privileged and confidential documents" related to Vanguard's income tax and financial arrangements.

POSTED: Thursday, October 23, 2014, 11:21 AM
(PennDOT)

UPDATE: Paul Nussbaum's Inquirer story lists winner Plenary-Walsh here. EARLIER: A decision on the winning bid from a group of rival corporate "public-private partnerships" hoping to rebuild 558 aging PennDOT bridges, at financing rates the Corbett administration has said may be a percentage point higher than public bonding, on a much faster construction timetable than the state usually manages, is due this month.

UPDATE: PennDOT Secretary Barry J. Schoch plans to name the winning team at 11 a.m. Friday at a bridge spanning a state boat ramp near Harrisburg, his spokeswoman Erin Waters-Trasatt confirms. Gov. Tom Corbett won't be there, she added, when I asked. This is a project and a concept Corbett has long supported.

The state has agreed to raise up to $1.2 billion to design an efficient standard bridge-building system and replace the worn spans. The Corbett administration has announced a string of (mostly smaller) crowd-pleasing jobs-producing business-supporting taxpayer expenditures in the weeks leading up to the Pennsylvania governor's race Nov. 4., see for example here.

POSTED: Thursday, October 23, 2014, 10:12 AM
2.0 University Place, the year-old 98,000-square-foot office building at 30 N. 41st St. that's home to Philadelphia's federal immigration offices and other tenants, is for sale.

2.0 University Place, the year-old 98,000-square-foot office building at 30 N. 41st St. that's home to Philadelphia's federal immigration offices and other tenants, is For Sale by developers Scott Mazo and James Levin, of University City redeveloper Neighborhood Restorations Inc./Prime Property Management; and Thomas A. Leonard, partner at law firm Obermayer Rebmann Maxwell & Hippel and longtime Democratic fundraiser.

Asking price: $46 million, which at around $469/sf could make this the highest-priced office space sale to date in Philadelphia and a hopeful sign for future developers of similar projects. (Dominant Center City/UCity landlord Brandywine Realty Trust was paying well under $200/sf for Center City Class A towers a few years back.) That price is $15 million above developers' announced $31 million construction price for the five-story building, which is double-LEED Platinum-rated (inside and out) by U.S. Green Building Council standards, with a green roof and medical-grade filtered air. 

The building, with its "exceptional and unique" environmental rating (for a multi-tenant building) and its location in a Keystone Opportunity state-and-local tax-break zone (easing tenant costs through 2018), has attracted interest from institutional investors, says David Dolan, broker on the sale with colleague Michael Margolis at NGKF Capital Markets. Immigration's lease has 15 years to run; the agency occupies the lower three floors. Top floor is vacant.

About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

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