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PHILADELPHIA-Welcome to the Philly 411, our monthly column on real estate happenings in the Metro area supplied with intel from David Jacobs, a director at Llenrock Group, a local commercial real estate investment-banking firm. You can also follow their blog here. Opinions are the author’s own.

Uptown Worthington Project Being Given Back to Lender?

Rumors from multiple sources suggest that O’Neill Properties Group is in danger of having to give the keys back to lender Citizens Bank on the Uptown Worthington project in Frazer. The Project, a brownfield redevelopment of the former Worthington Steel factory, was supposed to be a model for the principals of New Urbanism. The $540 million, 1.6-million-square-foot, 100-acre parcel was supposed to include 753 luxury residences, 745,000 square feet of upscale lifestyle retail, and an estimated 185,000 square feet of class “A” office space. Instead, it may serve as a model for great projects that have succumbed to the throes of a tanking economy.

Even leading developers with the magnificent track record and development prowess of Brian O’Neill cannot always overcome the inherent risk associated with real estate development. While both retail anchor tenants (Wegman’s and Target) remain committed, rumor has it that most of the office lease negotiations have broken down. For example, late in 2008, VWR International agreed to work with O’Neill Properties Group to build its global headquarters at Uptown Worthington. However, concerns about whether a new building could be completed prior to its deadline for relocating prompted VWR to exercise its termination right and shift its focus to the recently refurbished Radnor Corporate Center in a deal that was completed this past June.

2000 Market Comes Full Circle

2000 Market Street, the black monolithic office building in Downtown Philadelphia, has come full circle. Back in 2007, owner Rreef had the building under contract with CBRE Investors for around $93 million. While completing due diligence, CBRE Investors attempted a minor re-trade that would have lowered the purchase price by only a few million dollars. Instead of accepting the offer and booking a significant gain, RREEF scoffed and later put the property back on the market as the commercial real estate and capital markets continued to deteriorate. RREEF, who purchased the property for $76.6 million in 2004, watched in dismay this year as offers barely surpassed the $50 million dollar range. Recently, they were forced to give the keys back to lender Prudential. Now, rumor has it that Prudential has reached an agreement with, who else, CBRE Investors, to sell the building in the mid-$50 million dollar range.

Berkadia Commercial Mortgage Emerges from Capmark’s Ashes

Berkadia Commercial Mortgage, LLC, the newly formed entity owned by the partnership between Warren Buffett’s Berkshire Hathaway Inc. and Leucadia National Corp. was set to officially launch this week. Capmark recently received approval from the US Bankruptcy Court for the District of Delaware to complete the sale of its North American servicing and mortgage banking business to Berkadia, per the previously announced asset put agreement. As reported in a previous Philly 411, Midland Loan Services, the commercial mortgage servicing division of PNC Financial Services Group Inc., would top Berkadia’s bid of $408 million. However, according to Capmark attorney Michael Kessler, the Midland bid only covered a portion of the servicing portfolio and a portion of the company’s 1,000 employees. The Berkadia deal, however, involved Capmark’s entire $288.6 billion portfolio and all employees. Billionaire investor Warren Buffett is expected to be on the Berkadia Board of Directors.


In mid November, Crozer-Keystone completed a sale-leaseback with buyer Capital Solutions for a 256,000-square-foot, $38-million dollar medical office portfolio. The sale included the 40,000 square foot medical office building at 100 W. Sproul Road, the 176,000-square-foot hospital at 190 W. Sproul Road as well as the adjoining 40,000-square-foot medical office building. Crozer will lease back the facilities for twenty years. Capital Solutions paid approximately $150 per square-foot for the portfolio.

Also in late November, Pintzuk Brown Holdings closed on the Caln Plaza shopping center at 1847-1855 E. Lincoln Highway in Coatesville for $4.3 million. The 57,400-square-foot shopping center is 100 percent leased, anchored by Amelia’s Grocery Store, Family Dollar, and Rent-A-Center.

Stephen Starr will continue expanding his Philadelphia restaurant empire. This time, he will be taking over the former Midtown Diner at 2013 Chestnut Street. The small 3,500-square-foot space will house a themed restaurant dubbed “Mexico City” and is set to open in the spring of 2010. It will be interesting to see a Starr-caliber restaurant compete with other burrito-themed restaurants on the block, such as Qdoba (1900 Chestnut) and El Fuego (2104 Chestnut).


Goldenberg Group, Philadelphia’s leading developer of open-air power shopping centers laid off almost half of its entire 32-member staff, including the entire acquisitions department in late November. Goldenberg, who owns and manages nearly five-million square feet of retail space, had previously downsized the company from 45 strong to 32 in light of the downturn in the economy and lack of acquisition opportunities.

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