This Week's Philadelphia Deal Sheet
Philadelphia officials selected the firms that will help the city weigh in on the design of the Philadelphia 76ers' proposed Center City arena.
Convergence Design and Ian Smith Design Group will consult for the Philadelphia City Planning Commission, an agency nested within the Department of Planning and Development, the city announced Monday.
Though 76 DevCo, the 76ers' development arm, released updated renderings in August, the process for reviewing the design has yet to begin, the announcement says. With the selection of Convergence and IS-DG, the city has completed the request for proposals process for all three studies DPD commissioned on the 76 Place proposal: design, economic impact and community impact.
Engineering firm JMT was selected separately to work with the city's Office of Transportation, Infrastructure and Sustainability, SEPTA and the Pennsylvania Department of Transportation to assess the proposal's traffic and transportation impact.
With 76 DevCo contributing funds to finance the city's studies, anti-arena community activists launched a GoFundMe campaign last week seeking $50K to pay for what they call a truly independent study. As of 11:15 a.m. ET Thursday, it had raised less than $10K.
FINANCING
Ensemble/Mosaic, the joint venture serving as the Philadelphia Navy Yard's master developer, landed equity and debt financing for its first residential project at the 109-acre site. The $285M mixed-income multifamily building will be developed in partnership with Korman Communities under its AVE brand. A groundbreaking is scheduled for Tuesday.
Basis Investment Group, a Black- and woman-owned private equity firm based in New York, raised $100M in limited partner equity and preferred equity investments. Ensemble/Mosaic also secured two construction loans for AVE Navy Yard: one worth $78M from Ullico, an insurance provider for labor unions, and one worth $95M from M&T Bank, with Israel Discount Bank of New York joining as a participant lender.
CBRE Capital Advisors, in conjunction with the Philadelphia office of CBRE’s debt and structured finance division, advised Ensemble/Mosaic and Korman Communities in securing both loans and the equity investment.
SALES
New York-based investment firm KPR Centers sold the 103K SF grocery-anchored Gloucester Town Center in Sicklerville, New Jersey, to another, unnamed New York firm. The 100% occupied center's anchor, a 57K SF Acme supermarket, extended its lease and is planning a complete remodel.
Though the price was undisclosed, the buyer secured a fixed-rate, $8M acquisition loan with interest-only payments from Citigroup for the purchase, arranged by Walker & Dunlop Capital Markets.
CONSTRUCTION
Evernorth Health Services, a subsidiary of insurance giant Cigna, announced it will build a 200K SF specialty pharmacy and distribution center in Newark, Delaware, replacing a smaller facility it has operated in nearby New Castle.
Evernorth's specialty pharmacy brand, Accredo, will use the facility to distribute prescriptions directly to patients in the Northeast, while its pharmaceutical distribution brand, CuraScript SD, will distribute therapies for rare conditions to healthcare providers.
The new facility will receive financing assistance from the Delaware Council on Development Finance in the form of a jobs retention grant, a jobs performance grant, a capital expenditure grant and a matching training grant. Evernorth's bid for the grants was supported by the Delaware Prosperity Partnership.
THIS AND THAT
Fitch Ratings reported a likely loss of value for the loan backed by 401 Market St., a 484K SF office building near Independence Hall, due to Wells Fargo's decision not to renew its lease for 71% of the property when it expires next year. The only other tenant is the American Bible Society, which has a permanent exhibition on the lower floors of the building for at least the next 18 years.
Fitch downgraded the outlook for three investment tranches in a CMBS package including the 401 Market loan based on the loss of value from the vacancy, the difficulty anticipated in backfilling the space and the risk of maturity default. Softening the blow is that Wells Fargo contributed much less to the building's income than the Bible Society due to its rent being less than a fifth of the submarket's average.
Borrower Miller Real Estate Fund II took out a $56M loan with a 4.72% interest rate when it acquired the property in 2015. The loan has a maturity date of October 2025, according to the CMBS package's initial Securities and Exchange Commission filing. MREF II had just under $5M in cash reserves for the property as of September, Fitch reported.
