Hilco Redevelopment Partners Buys Refinery Site for $226M
- Jun 30, 2020
Hilco Redevelopment Partners prepares to take on a massive project as it closes on the $225.5 million acquisition of the former Philadelphia Energy Solutions refinery complex in Philadelphia. Hilco plans to transform the 1,300-acre site into a multi-modal logistics hub.
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Located on Passyunk Ave. along Schuylkill River, the shuttered PES complex sits roughly 3 miles from downtown Philadelphia and is equal in size to the city’s entire central business district. Hilco’s purchase of the property comes roughly one-year after the refinery suffered an explosion, followed by permanent closure after approximately 150 years of operation. The sale had been in the works for several months and has only recently received the final green light from the U.S. Bankruptcy Court, which approved Hilco’s request to reduce the price in the original purchase and sale agreement by $25 million.
With completion of the sale, Hilco can move forward with a new vision for the sprawling site. The company plans to collaborate with state and local officials as well as community groups to iron out a plan for what will ultimately be one of the largest multi-modal logistics centers in the U.S. It appears the market is conducive to such a project. The total industrial occupancy rate in Philadelphia County was a low 3 percent in the first quarter of 2020, according to a report by CBRE, and an increasingly loud cry for additional space on the horizon. “E-commerce and logistics users are expected to see the most amount of demand growth in the coming quarters as many Americans relied more on food and grocery deliveries as many state governments are asking people to quarantine-in-place in the face of the COVID-19 outbreak,” according to the report.
Redeveloping massive industrial properties is Hilco’s forte. Most notably, in 2012, the company acquired the former Bethlehem Steel Mill site for $72 million, with plans of transforming the 3,300-acre property, also known as the historic Sparrows Point steel mill, into a cutting-edge industrial destination. Today, the site is home to the highly successful, 17 million-square-foot Tradepoint Atlantic port and logistics center.
Hilco expects the PES project to be a long-term undertaking. However, the road to realization should be made easier by the fact that the site benefits from an existing industrial infrastructure that includes build-out pipelines and storage facilities, in addition to rail, vessel and truck access. The location is within a six-hour drive of one-third of the U.S. population.