AREP Gets Loan Extension on Philly Office Tower
The transaction also provides the owner with an increased lease funding line for the property.
American Real Estate Partners has obtained a four-year loan extension for 1600 Market St., an iconic 39-story, 825,968-square-foot office tower in Philadelphia’s Central Business District. The transaction, which also includes access to an increased future lease funding line, has ensured the full capitalization of the property.
Senior lenders Natixis Corporate & Investment Banking and BlackRock, along with mezzanine lender JPMorgan, extended the loan’s maturity through a complex financing structure. As part of the deal, AREP made a significant equity investment in the property. The firm declined to release the investment’s amount.
Natixis CIB provided the five-year, $162.5 million loan in February 2022 that refinanced the Class A property. AREP had acquired the tower in February 2018 from Equity Commonwealth for $160 million.
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Peter Bayard, managing director at Natixis CIB, was involved in arranging the new transaction.
“The loan extension ensures the long-term financial stability of the property, which is a significant advantage relative to the challenges other projects are facing in today’s commercial real estate market. Our partnership highlights the strength and confidence AREP and our senior lenders, Natixis, BlackRock and JPMorgan, all have in the property’s future,” Brian Katz, co-founder & president of AREP, told Commercial Property Executive.
Katz said the extended funding also gives AREP the resources to maintain 1600 Market’s position as a trophy building and continue attracting high-quality tenants seeking superior properties with stable owners that can perform.
Tenant roster growing
PNC Bank, which has its regional headquarters at the property, is the anchor tenant at the building that is currently 70 percent leased. PNC has committed to 233,411 square feet through May 2031, according to CommercialEdge data.
Recent lease transactions include HNTB—which is occupying 38,375 square feet—Lockton Insurance and Your Part Time Controller, according to AREP. Other tenants include Security Risk Advisors, which leases 21,687 square feet, Stifel, NorthMarq Advisors, Gallagher Law, Crum & Forster and AEGIS insurance firm, the same source reveals.
Focus on amenities
The Center City tower is one block from the Philadelphia City Hall and two blocks from JFK Plaza. Completed in 1982, the building features floorplans of 23,000 square feet and seven elevators, CommercialEdge shows, as well as 10,000 square feet of retail space.
AREP’s $15 million, multi-year renovation of the property was completed in January 2021. The high-rise features at least 8,000 square feet of amenities including collaboration space, conference rooms, wellness and fitness areas and a coffee bar from Elixr, a local favorite. The building has received recognition for its tenant experience app—AREPx—and for the amenity floor design and use of pop art.
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