Regions Midatlantic | Philadephia
Nov 9, 2007
By: Barbra Murray, Contributing Editor
Brandywine Realty Trust is planning to take a 29-property chunk of its suburban Philadelphia office portfolio and sell it to a new joint venture for $245.4 million. The Radnor, Pa.-based REIT just signed an agreement with New York City's DRA Advisors L.L.C. to form the joint venture, of which Brandywine will own 20 percent.
Presently 96.4 percent leased, the portfolio encompasses approximately 1.6 million square feet, with 11 properties totaling 672,900 square feet in Allentown; nine properties in Horsham with an aggregate 318,100 square feet; six properties in Ft. Washington totaling 457,900 square feet; and 167,300 square feet contained in three buildings in Bensalem.
The suburban Philadelphia office market, according to a third quarter report by real estate services firm Cushman & Wakefield, is on the upswing, predominantly due to the consistent expansion of various business sectors, including education and healthcare services. The average direct vacancy rate in the suburbs is 13.7 percent; the figure, well above the portfolio's average vacancy level, is indicative of the quality and desirability of the assets.
Real estate services firm CB Richard Ellis Inc. acted as Brandywine's marketing advisor for the transaction with DRA. Prior to the completion of the joint venture, anticipated to occur by the end of the year, Brandywine and DRA plan to attain an approximately $184 million mortgage loan from a third-party institutional lender. Upon closing, Brandywine will serve as the operating member of the joint venture and, under a separate agreement, will oversee management and leasing activities for the properties through its subsidiary, for which it will be paid a market-based fee. As per the terms of the joint venture agreement, neither partner will be able to sell any of the assets during a two-year period following the closing of the joint venture transaction unless agreed upon.
The sale of the assets to the joint venture will leave Brandywine with an estimated profit of about $235.2 million, excluding closing costs. The company plans to use the funds to pay down debt under its unsecured revolving credit facility. Brandywine amended and restated its $600 credit facility, originally secured in 2005, in June. For DRA, the deal will mark its second joint venture with a public REIT this year. In April the company entered in to an agreement with Colonial Properties Trust for a $1.1 billion joint venture involving 6.9 million square feet of premier office assets and two retail centers in the Sunbelt region.
New York-based DRA is an investment advisor that focuses on real estate investment management services for institutional and private investors. The firm manages more than $9 billion in assets consisting of about 20 million square feet of office and industrial space, 32 million square feet of retail and 19,000 residential units. Brandywine owns, develops and manages predominantly Class A office properties accounting for a total of approximately 44.1 million square feet. Company stock opened today at $21.75, marking the lowest price over the last 52 weeks. The drop comes one day after Brandywine, which saw a 3 percent decline in results in the third quarter, cut its outlook, as reported by the Associated Press.
By: Barbra Murray, Contributing Editor
Brandywine Realty Trust is planning to take a 29-property chunk of its suburban Philadelphia office portfolio and sell it to a new joint venture for $245.4 million. The Radnor, Pa.-based REIT just signed an agreement with New York City's DRA Advisors L.L.C. to form the joint venture, of which Brandywine will own 20 percent.
Presently 96.4 percent leased, the portfolio encompasses approximately 1.6 million square feet, with 11 properties totaling 672,900 square feet in Allentown; nine properties in Horsham with an aggregate 318,100 square feet; six properties in Ft. Washington totaling 457,900 square feet; and 167,300 square feet contained in three buildings in Bensalem.
The suburban Philadelphia office market, according to a third quarter report by real estate services firm Cushman & Wakefield, is on the upswing, predominantly due to the consistent expansion of various business sectors, including education and healthcare services. The average direct vacancy rate in the suburbs is 13.7 percent; the figure, well above the portfolio's average vacancy level, is indicative of the quality and desirability of the assets.
Real estate services firm CB Richard Ellis Inc. acted as Brandywine's marketing advisor for the transaction with DRA. Prior to the completion of the joint venture, anticipated to occur by the end of the year, Brandywine and DRA plan to attain an approximately $184 million mortgage loan from a third-party institutional lender. Upon closing, Brandywine will serve as the operating member of the joint venture and, under a separate agreement, will oversee management and leasing activities for the properties through its subsidiary, for which it will be paid a market-based fee. As per the terms of the joint venture agreement, neither partner will be able to sell any of the assets during a two-year period following the closing of the joint venture transaction unless agreed upon.
The sale of the assets to the joint venture will leave Brandywine with an estimated profit of about $235.2 million, excluding closing costs. The company plans to use the funds to pay down debt under its unsecured revolving credit facility. Brandywine amended and restated its $600 credit facility, originally secured in 2005, in June. For DRA, the deal will mark its second joint venture with a public REIT this year. In April the company entered in to an agreement with Colonial Properties Trust for a $1.1 billion joint venture involving 6.9 million square feet of premier office assets and two retail centers in the Sunbelt region.
New York-based DRA is an investment advisor that focuses on real estate investment management services for institutional and private investors. The firm manages more than $9 billion in assets consisting of about 20 million square feet of office and industrial space, 32 million square feet of retail and 19,000 residential units. Brandywine owns, develops and manages predominantly Class A office properties accounting for a total of approximately 44.1 million square feet. Company stock opened today at $21.75, marking the lowest price over the last 52 weeks. The drop comes one day after Brandywine, which saw a 3 percent decline in results in the third quarter, cut its outlook, as reported by the Associated Press.
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