UPDATE: Pitcairn Pays $251M for Chesterbrook and Glenhardie Corporate Centers

WAYNE, PA-Pitcairn Properties has closed on its acquisition of the Chesterbrook and Glenhardie corporate centers, a 17-building portfolio of class A office properties, aggregating nearly 1.3 million sf and encompassing 170 acres. Salah Mekkawy, Pitcairn’s chairman and CEO, says the price tag, excluding closing costs, is $251 million, or almost $198 per sf, and tells GlobeSt.com his company will invest between $5 million and $10 million in capital improvements.

Pitcairn partnered with Frankfurt, Germany-based SEB Immobilien-Investment GmbH, in the acquisition. This is Pitcairn’s first JV with the open-ended real estate fund, but possibly not its last. Mekkawy says the partnership plans more acquisitions “on the East Coast.” He declined to disclose each entity’s proportion of ownership. Pitcairn now has a portfolio valued at $1 billion.

This transaction is the largest in the suburban Philadelphia office market since Brandywine acquired Rubenstein Co.’s 3.5-million-sf office portfolio for $600 million in September 2004. The Chesterbrook portion of the acquisition contains 13 buildings aggregating about a million sf. Glenhardie is a four-building complex of more than 250,000 sf. The portfolio is currently 82% leased. Dan Dagit, SVP in the local office of CB Richard Ellis, is handling leasing, and he tells GlobeSt.com, “the asking rates in Chesterbrook are in the mid $20s per sf, and rates in Glenhardie are in the low $20s per sf.”

The seller, locally based Fox Realty Co., developed the centers in the 1970s and 1980s. It later sold them only to reacquire them in partnership with the State of Florida Pension Fund in 1997, according to Robert Lee, EVP of Fox. Fox, which is headquartered in Chesterbrook, is retaining two buildings on the campus that are not a part of the portfolio.

In September 2005, GlobeSt.com reported that Fox commissioned the team of Glenn Whitmore, Joe Morningstar and Andrew Scandalios in the New York office of Holiday Fenoglio Fowler to market the centers. There was no asking price. At the time, Lee told GlobeSt.com, “we’re market timers and we generally keep properties for five to 10 years.” As for what Fox will do with the proceeds, he said the sale “would put us in a position to recapitalize our efforts. We’re opportunistic developers.”

Among the current tenants are Vanguard, SunGard, Shire Pharmaceuticals, Centocor, AmerisourceBergen, Proctor & Gamble, Morgan Stanley and New England Life Insurance Co. Mekkawy says the capital improvements will include upgraded lobbies and tenant space. “We have leasing in the pipeline that will take occupancy to between 90% and 92% by year-end.”