Piedmont Office Realty Trust Sells Landmark Office Tower for $360M
1901 Market Street’s long-time, exclusive tenant, Independence Blue Cross acquired the 800,000-square-foot, class A Philadelphia tower in a 1031 exchange.
PHILADELPHIA – Independence Blue Cross has acquired the landmark, 45-story, class A, office tower at 1901 Market Street in downtown Philadelphia from the Atlanta-based REIT, Piedmont Office Realty Trust, in a $360 million transaction.
The 800,000-square-foot tower has been exclusively leased to the health insurance company, serving as its headquarters, since the property’s completion in 1989. Piedmont Office Realty Trust has owned the asset since 2003.
Selling for $450 per square foot, the transaction represents the disposition of Piedmont Office Realty Trust’s sole Philadelphia asset. As a result of the sale, 96% of the REIT’s annualized lease revenue is now generated from its seven core markets, primarily from its Sunbelt locations.
Throughout the past eight years, the office tower has undergone more than $110 million in capital improvements, including various interior renovations, a new lobby, an outdoor plaza and new mechanical systems.
CBRE capital markets’ institutional properties team of Robert Fahey, Jerry Kranzel, Erin Hannan and Jack Corcoran marketed the property and arranged the sale on behalf of the seller, Piedmont Office Realty Trust.
“The sale of 1901 Market Street concludes a successful recycling story for Piedmont, allowing us to dispose of a long-term, 100%-leased asset in a non-strategic market where we believe the value potential during our ownership has been realized and to fully reinvest the proceeds accretively into our recent purchase of Dallas Galleria Office Towers,” said Piedmont president and CEO, C. Brent Smith. “The transaction was structured as a 1031 exchange for tax purposes; therefore, no special distribution will be required despite the nine-digit gain on the sale of 1901 Market. Overall, this transaction represents a good strategic move for the purchaser and a phenomenal outcome for our stockholders.”
“We are pleased and honored to have been chosen by Piedmont as their marketing and financial advisor for this landmark transaction,” said Fahey, CBRE EVP. “Working closely with these two industry leaders over the past several months has been especially rewarding.”
