HFF closes $160.75 million sale of medical office building in Center City, Philadelphia

(Thomson Reuters ONE via COMTEX) — PHILADELPHIA, PA – May 19, 2015 – Holliday Fenoglio Fowler, L.P. (HFF) announced today that it has closed the sale of 833 Chestnut, a 12-story, 705,061-square-foot medical office building across from Thomas Jefferson University Hospital (TJUH) in Center City, Philadelphia.

HFF marketed the property on behalf of the seller, Digital Realty Trust. A publicly-traded healthcare REIT purchased the asset for $160.75 million.

Originally built in 1928 as an addition to the original Gimbel Brothers retail department store complex, 833 Chestnut was substantially renovated and is currently 92 percent leased. The property’s major tenants include Thomas Jefferson Hospital, JUP, Thomas Jefferson University, Nemours Children’s Clinic, the U.S. Government and Ballinger Company. The total GLA includes approximately 60 percent clinical use, which continues to grow year-over-year.

The HFF investment sales team representing the seller was comprised locally of senior managing directors Mark Thomson, Andrew Scandalios and Jose Cruz, and nationally by managing directors Michael Bennett and Philip Mahler who are team leaders of the medical office building group within HFF’s national healthcare practice.

“833 Chestnut is an excellent example of the synergies that exist between HFF offices. Our local team realized it was more than just a general office deal; we enlisted the help of our healthcare group, put the best team on the field, collaborated keeping the client’s best interests in mind, and ultimately secured significant proceeds over and above for what a general office might have traded,” said Scandalios.

“We marketed this asset to all of the typical office buyers in the northeast but the demand for medical office simply priced those groups out of the market,” added Thomson.

“We had significant interest from all the ‘usual suspects’ in the medical office building space, as well as private equity, pension fund advisors, and even some foreign capital. The size of the property can really move the needle for some of these groups. Pricing was aggressive, and this transaction is a testament to how accretive the current MOB market is for sellers,” added Bennett.

“TJUH and its affiliates has significantly increased its presence in 833 Chestnut over the last seven years and now is the anchor tenant in the building, leasing over 50 percent of the net rentable area. This significant hospital-related tenancy created an opportunity for a medical office investor to develop a strategic relationship with TJUH which tremendously increased competition for this asset,” said Mahler.

About HFF

HFF and HFFS (HFF Securities L.P.) are owned by HFF, Inc. HF, +0.42% HFF operates out of 22 offices nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. commercial real estate industry. HFF together with its affiliate HFFS offer clients a fully integrated national capital markets platform including debt placement, investment sales, equity placement, advisory services, loan sales and commercial loan servicing. For more information please visit hfflp.com or follow HFF on Twitter @HFF.

By Marketwatch.com


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