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March 09, 2018  

Coretrust Ready to Refinance Phila. Offices

An investment shop wants to put $237 million of fresh debt on a Philadelphia office condominium it purchased a year and a half ago.

Coretrust Capital is seeking to refinance the 940,000 square feet of office space at Two Liberty Place, in the Center City district. It prefers a floating-rate loan with a total term of up to five years. A portion of the balance, around $45 million, would be held back as future funding for leasing and tenant-improvement costs. Eastdil Secured is pitching the assignment to a range of lenders.

Los Angeles-based Coretrust bought the office portion of the 1.2 million-sf skyscraper in October 2016, paying $218.6 million to a Parkway Properties partnership. Mesa West provided $175 million of debt to finance the acquisition, according to Real Capital Analytics.

At the time, the occupancy rate had dropped below 90%, due to downsizing by a major tenant, Cigna. The healthcare insurer had signed a new long-term lease but reduced its footprint by 90,000 sf, to 322,000 sf. Coretrust set out to renovate the lobby, common areas and amenities, fill vacant space and raise rents as leases rolled over.

The firm has completed at least some of that program, and the occupancy rate is back over 90%. The improvements, and a general run-up of property values in Philadelphia, enabled Coretrust to come back to the lending market relatively early, seeking higher proceeds. Additionally, it plans further upgrades aimed at boosting cashflow and nudging the building’s value higher.

The office condo is on the lower 36 floors of the 57-story tower. Luxury residential condos occupy the upper floors. The glass-sheathed building is at South 16th Street and Chestnut Street, two blocks west of City Hall. It was completed in 1990, a few years after Philadelphia eased a restriction on the development of buildings taller than the statue of William Penn atop City Hall.

The property is adjacent to the 61-story One Liberty Place, the Shops at Liberty Place mall and the Westin Philadelphia Hotel.