Friday, July 3, 2015

Brandywine invests $25M in Center City towers: Update

Brandywine buys a stake in Commerce Square

Brandywine invests $25M in Center City towers: Update

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Brandywine Realty Trust has invested $25 million for a 25% interest in grey-stone-faced Commerce Square, twin 41-story towers totalling 1.9 million square feet of Class A office space in the 2000 block of Market Street in Center City.

UPDATED: The deal values the buildings' equity at $100 million, or around $53 a square foot. Brandywine boss Gerard Sweeney notes that a buyer would also have to finance the building's debt of $238 million, or $125 a square foot. That sets the building's total value at around $178 a square foot on a debt + equity basis. Still less than half the cost of new construction.

But better than letting the towers run down. "This is a good sign for those buildings.  They were out of cash, and this stabilizes them," says Robert Fahey, executive vice president at building broker CB Richard Ellis Inc.

EARLIER: Brandywine will own the buildings as minority partner with previous Commerce owner Thomas Properties Group of Los Angeles remaining in control. Brandywine's money - $5 million at closing, $20 million by the end of 2012 - "will provide substantial capital to improve these premier properties and maintain their position among the highest-quality buildings in Center City," Thomas boss James A. Thomas said in a statement. Thomas will "oversee" the investment, Brandywine boss Gerard H. Sweeney said.

The Henry Cobb-designed towers, built in 1987 and 1992 with an enclosed garden and a few postmodern angular stone flourishes, are 89% leased; tenants include Delaware Investments, Ernst & Young, Grant Thornton, and Wolters Kluwer, among others.

The deal follows Brandywine's recent $129 million ($125/sq ft) purchase of the former Bell Atlantic headquarters in a deal with Blackstone Group, New York, a bargain, compared to the $400/sq ft price of the city's last big tower, Liberty Property Trust's Comcast Center, in the mid-2000s.

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About this blog

PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, distefano251@gmail.com, 215.854.5194 or 302.652.2004.

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

Joseph N. DiStefano
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