Brandywine acquires One and Two Commerce Square for USD331.8m
Brandywine Realty Trust has entered into an agreement with Parkway Properties to acquire two Trophy-class high rise assets located in Philadelphia's CBD, One and Two Commerce Square, based on a USD331.8m valuation, or USD175 per square foot.
Closing of the acquisition is subject to customary closing conditions and the consummation of the merger between Parkway and Thomas Properties Group.
Brandywine currently owns a 25 per cent preferred interest in Commerce Square and will acquire the remaining common ownership interests from Thomas subject to two existing first priority mortgages totalling approximately USD238.0m and will fund the remaining net cash portion totalling USD69.0m from Brandywine's existing cash balances.
Commerce Square consists of two 41-story Trophy-class towers comprising a full city block on Market Street between 20th and 21st Streets and totals 1,896,142 square feet. The buildings were built in 1987 and 1992 and, through a recent extensive capital redevelopment programme, Commerce Square achieved LEED-Silver status. Commerce Square has a central plaza, The Court at Commerce Square, including ground-level retail, restaurant space and a 525-space underground garage. Upon completion of the transaction, Brandywine will assume full management responsibilities, including property management and leasing.
"This transaction enables us to acquire two of Philadelphia's Trophy-class CBD properties at a significant discount to replacement cost," says Gerard H Sweeney (pictured), president and chief executive officer of Brandywine Realty Trust. "Commerce Square is currently 88 per cent leased providing good current NOI with significant occupancy and rental rate growth opportunities. This transaction is consistent with our stated objective of increasing overall revenue contribution from urban and town centre properties. This acquisition is subject to existing secured debt balances and we will continue acceleration of our non-core asset sale programme to continue strengthening our balance sheet."
Brandywine has also entered into an agreement with Parkway to acquire Four Points Centre and an adjacent 19-acre land parcel in Austin, Texas for USD51.0m. Four Points Centre is valued at USD42.0m, or USD217 per square foot, and is comprised of two three-story buildings located in Austin's Northwest submarket and totals 193,862 square feet. The two LEED-Gold buildings were built in 2008 and are currently 100 per cent leased. The adjacent 19-acre land parcel is valued at USD9.0m, or USD18.75 per FAR, and is entitled to build up to 480,000 square feet of office space.
The acquisition is subject to a 45-day due diligence period, customary closing conditions and the completion of the merger between Parkway and Thomas.