PHILADELPHIA, PA – May 19, 2015 – Holliday Fenoglio Fowler arranged the $160.75 million sale of 833 Chestnut Street, a 12-story, 705,061 square foot medical office building across from Thomas Jefferson University Hospital in Center City Philadelphia. 

HFF marketed the property on behalf of the seller, Digital Realty Trust.  HCP, a publicly traded healthcare REIT, purchased the asset. 

“833 Chestnut was a perfect example of HFF putting the best team on the field for a unique assignment,” HFF senior managing director Mark Thomson tells GLobeSt.com exclusively.  "Our Philadelphia and New York/New Jersey teams already work collaboratively on institutional quality assignments in order to cover all buyers. However, in this situation the assignment warranted another layer of coverage.  Our medical office team has continued to prove that national MOB buyers will price out the regional and national office buyers for acquisitions that check the boxes for them.  In this case, they really delivered and our client was very pleased with the value-added execution.”

Originally built in 1928 as an addition to the original Gimbel Brothers retail department store complex, 833 Chestnut was substantially renovated and is currently 92 percent leased.  The property's major tenants include Thomas Jefferson Hospital, JUP, Thomas Jefferson University, Nemours Children's Clinic, the US Government and Ballinger Company.  The total GLA includes approximately 60 percent clinical use, which continues to grow year-over-year. 

In addition to Thomson, the HFF investment sales team representing the seller was comprised locally of senior managing directors Andrew Scandalios and José Cruz, and nationally by managing directors Michael Bennett and Philip Mahler who are team leaders of the medical office building group within HFF's national healthcare practice.

“833 Chestnut is an excellent example of the synergies that exist between HFF offices.  Our local team realized it was more than just a general office deal; we enlisted the help of our healthcare group, put the best team on the field, collaborated keeping the client's best interests in mind, and ultimately secured significant proceeds over and above for what a general office might have traded,” says Scandalios.

“We marketed this asset to all of the typical office buyers in the northeast but the demand for medical office simply priced those groups out of the market,” says Thomson. 

“We had significant interest from all the 'usual suspects' in the medical office building space, as well as private equity, pension fund advisors, and even some foreign capital.  The size of the property can really move the needle for some of these groups.  Pricing was aggressive, and this transaction is a testament to how accretive the current MOB market is for sellers,” says Bennett.

“TJUH and its affiliates has significantly increased its presence in 833 Chestnut over the last seven years and now is the anchor tenant in the building, leasing over 50 percent of the net rentable area,” says Mahler. “This significant hospital-related tenancy created an opportunity for a medical office investor to develop a strategic relationship with TJUH which tremendously increased competition for this asset.”

Correction, 5/20/2015: An earlier version of this story did not identify the purchaser of the property. It was HCP, Inc., a publicly traded healthcare REIT in Irvine, CA.