Brandywine Realty Trust has sold a 30% stake in One and Two Commerce Square for $115 million, raising money to invest back into the company’s future projects.
Brandywine, a Philadelphia real estate investment trust, said it closed on the transaction with an undisclosed global institutional investor in a deal the company values as a $600 million joint venture. A Brandywine spokeswoman said that at the request of the investor, the company isn’t divulging the name at this time.
Brandywine, which released second quarter results late Wednesday, is scheduled to have a quarterly earnings call Thursday.
As part of the deal, Brandywine (NYSE: BDN) and the undisclosed buyer will invest $20 million into the 1.9-million-square-foot Center City office complex. The transaction is subject to an existing $222 million mortgage, and Brandywine said it raised around $100 million in net cash proceeds as part of the transaction.
Brandywine said it will continue in its role as property manager and leasing agent for the two, 40-story building complex that totals 1.9 million square feet. Commerce Square includes a 519-space underground parking garage and a 30,000-square-foot courtyard.
Tenants include Ernst & Young, Pew Charitable Trusts and Stradley Ronon Stevens & Young.
“This transaction creates a valuable partnership with one of the world’s top real estate investors, marking their first direct office investment in downtown Philadelphia,” Brandywine said in a statement.
The deal with the investor allows it to be passive and gives Brandywine the ability to raise capital without diluting shareholder value.
Brandywine also said the deal positions Commerce Square for continued growth and will generate $100 million “to accelerate the execution of our business plan.”
Commerce Square was built in the late 1980s and early 1990s. Brandywine said it will record a gain on the transaction during the third quarter in excess of $270 million subject to final closing settlements.
Brandywine Realty Trust purchased One and Two Commerce Square in 2013 for $331.8 million, or $175 a square foot. The company acquired the properties from Parkway Properties Inc., which merged with Thomas Properties Group Inc.
The deal helped solidify Brandywine as the lead landlord of Center City trophy space.
Brandywine reported second-quarter funds from operations — a key industry metric for REITs — of $57.7 million, or 34 cents per share, down from $62.2 million, or 35 cents per share, in the year ago period.
*Article courtesy of Philadelphia Business Journal
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