Wanamaker Building, Already In Special Servicing, Loses Largest Tenant
The Wanamaker Building has suffered another blow to its value as its debt situation sits in limbo.
Digitas will vacate its 109K SF office at the 1.4M SF National Historic Landmark when it expires in November, the Philadelphia Business Journal reports. The healthcare advertising firm signed a lease for 55K SF at the Bourse Building overlooking Independence Mall in Old City.
Digitas was by far the largest remaining tenant at the Wanamaker, owned by a joint venture of Rubenstein Partners and Amerimar Enterprises. Rubenstein bought a majority share of the Wanamaker in 2017 when it was 96% leased, but two major departures in the past three years left over 500K SF of the 954K SF office portion vacant.
Having sold the Macy's-occupied first three floors to TF Cornerstone in 2019, the JV's commercial mortgage-backed securities loan for the office portion was transferred to special servicing in March ahead of a June 10 maturity date, PBJ reported. Rubenstein invested $30M in capital improvements ahead of its occupancy drop, around the same time it put the office condo up for sale as a potential life sciences conversion.
A February report from credit analytics firm Morningstar Credit estimated the Wanamaker's loan-to-value ratio hit 110% when it was 47% occupied. When Digitas vacates, occupancy will drop to around 36%.
The massive building, which faces Philadelphia City Hall at 100 East Penn Square, sits a few feet away from two other office buildings of similar vintage also in special servicing: the Widener Building and One South Broad.
Despite the maturity date having passed for the Wanamaker, foreclosure isn't a foregone conclusion considering how unappetizing the prospect of taking possession may be to a lender. Rubenstein will have its own decision to make regarding its debt and ownership.
The Bourse, into which Digitas is moving, was only 38% leased when the year began, PBJ reported. Washington, D.C.-based owner MRP Realty put the building up for sale in January as part of a four-building Old City portfolio.
