Brandywine, Thomas Team up on Commerce Square

PHILADELPHIA-Brandywine Realty Trust and Thomas Properties Group said Wednesday they’re joining forces to co-own the 1.9-million-square-foot Commerce Square office complex in Center City. Brandywine is kicking in a total of $25 million of preferred equity and will become a 25% limited partner in both the One Commerce Square and Two Commerce Square partnerships, according to a release.

Thomas chairman and CEO Jim Thomas says in a statement that the alliance with Brandywine “will provide substantial capital to improve these premier properties and maintain their position among the highest quality buildings in Center City Philadelphia.” Among other things, Radnor, PA-based Brandywine’s capital will be used for upgrades intended to achieve LEED status for both of the 41-story twin towers, located at 2001 and 2005 W. Market St. here.

Originally developed in the late 1980s and early 1990s by a Thomas Properties predecessor, Commerce Square is currently over 89% leased. That puts the towers’ vacancy rate on par with the second-quarter average for class A space in Center City: 10.3%, according to Jones Lang LaSalle.

Tenants at Commerce Square include Delaware Investments, Ernst & Young, Grant Thornton, McCormick Taylor Co., the Pew Charitable Trusts, PricewaterhouseCoopers, Reliance Standard Life Insurance, Stradley Ronon, TD Bank and Wolters Kluwer Health.

The deal is expected to close in the fourth quarter, at which time Brandywine will provide an initial $5 million of equity. It will invest the balance by the end of 2012, the release states. The Los Angeles-based Thomas’ wholly-owned affiliates will remain the sole general partners in each partnership and will continue as property manager and leasing agent for Commerce Square.

Earlier this month, Brandywine closed on its $129-million acquisition of the leasehold interest in 1717 Arch St., formerly known as the Bell Atlantic Group. The one-million-square-foot office tower in Philadelphia’s Logan Square submarket, which is currently 63% leased, was acquired from an affiliate of the Blackstone Group. Gerard Sweeney, Brandwyine’s president and CEO, said in a release that the 1717 Arch deal “complements our existing One and Two Logan Square properties and affords us control over some of the best product in the Philadelphia office market.”