Brandywine Realty Trust has acquired the leasehold interest in 1717 Arch Street, a 1,029,400 square foot, 53-story, class A office tower located in the central business district of Philadelphia from an affiliate of The Blackstone Group.

The property, previously known as Bell Atlantic Tower, was acquired for USD129m, or USD125 per square foot, funded through a combination of USD51.2m of cash and 7,111,112 operating partnership units.

Approximately USD250,000 of transaction costs will be expensed in the third quarter of 2010.

Located in the prestigious Logan Square sub-market, the property is currently 63 per cent leased and also has a 309-space parking garage. The property is subject to a long-term land lease with Verizon, which has been prepaid through August 2022 and which can be extended through 2092. Verizon recently signed a space lease for 121,945 square feet comprising floors two through seven of the building.

Brandywine now owns 3.9 million square feet in Philadelphia, including One and Two Logan Square, which together are 98 per cent leased, as well as Cira Centre (97 per cent leased), the IRS Philadelphia campus (97 per cent leased) and two development sites at Cira South, all in the University City submarket.

"The acquisition of 1717 Arch Street reflects an exceptional opportunity and is consistent with our investment strategy of identifying value-added situations in our existing markets, focusing on urban/town centres and utilising equity based financing structures," says Gerard H. Sweeney, Brandywine's president and chief executive officer. "This building complements our existing One and Two Logan Square properties and affords us control over some of the best product in the Philadelphia office market."

Frank Cohen, senior managing director of The Blackstone Group, adds: "We are excited to become significant shareholders of Brandywine in connection with this transaction. We see this as a great opportunity to participate in the US office market recovery in a high quality portfolio with a terrific management team. Brandywine also has the right team to re-lease and reposition 1717 Arch Street."