Brandywine Sells Interest in Historic Cira Square for $345M
- Feb 10, 2016
By Keith Loria, Contributing Editor
Brandywine Realty Trust has completed its sale of interests in Cira Square, a historic 862,700-square-foot former U.S. Post Office complex in the University City district of Philadelphia, for a reported $354 million in net proceeds. The buyer is a South Korean fund managed by Seoul-based Korea Investment Management Co., as international interest in CRE continues.
“The sale of Cira Square reflects our ability to both create and harvest value and will generate a significant gain to our shareholders,” Gerard H. Sweeney, Brandywine Realty Trust’s president & CEO, said in a prepared release. “We acquired the historic post office building in 2007, embarked on a multi-year renovation of this iconic Philadelphia landmark and rebranded it as Cira Square.”
The Cira Square property consists of 862,700 square feet and is currently fully leased to the General Services Administration and occupied by the Internal Revenue Service. Brandywine will continue to provide management services at the property.
Money from the sale will go towards paying the mortgage on the property and prepaying the Cira Centre South Garage mortgage totaling $35.5 million, unencumbering its 1,662-space facility.
The company has also sold three office properties located in Carlsbad, Calif., for $30.4 million. Combined the properties total 196,100 square feet and are 65 percent leased. Additionally, it sold a 1.6-acre development site located at the corner of 2nd and King streets in Wilmington, Del., for $6.5 million, and a 158,000-square-foot flex/office property located in King of Prussia, Pa., for $4.6 million.
Brandywine expects these deals to result in a net gain of approximately $124.5 million of net proceeds, which will be used to fund current development commitments, reduce debt and for general corporate purposes.
“The other asset sales represent our continued efforts to reduce our ownership in non-core assets and markets,” Sweeney said. “As evidenced by these transactions, the current investment market remains strong and consistent with our 2016 guidance. We anticipate additional sales between now and the first half of 2016.”
Brandywine also completed a nearly $400 million sale of 58 office properties that essentially finishes a multi-year effort to exit certain markets that don’t fit into its overall strategy to focus on urban areas and town centers.
The sale involved 10 buildings totaling 557,144 square feet in New Jersey, 11 buildings totaling 612,738 square feet in Pennsylvania, as well as properties in Northern Virginia and Richmond, Va.
Last week on Brandywine Realty Trust’s earnings call, it was revealed that Brandywine will report a gain of approximately $114 million in the first quarter of 2016.