833 Chestnut St. Trades Hands for $160 Million

Less than one year after it was put on the market, the 12-story data center and medical office building sitting across from Thomas Jefferson University Hospital (TJUH) in Center City Philadelphia is under new ownership.

The announcement was made by HFF, which was hired exclusively by colocation services and data center solutions provider Digital Realty Trust to market the asset. The building was purchased by California-based real estate investment trust HCP Inc. in a transaction valued at $160.75 million, or roughly $228 per square foot.

Located at 833 Chestnut St., the 705,061-square-foot Class A medical office structure is one of the largest buildings in Center City. It was 92 percent leased at the time of sale, according to HFF. Around 60 percent of the building is currently occupied by Jefferson Health System, while the rest of the space is leased to other major tenants such as the U.S. Government and the Ballinger Company.

“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,” said Michael Bennett, managing director of HFF’s National Healthcare Capital Markets Group, in a prepared statement.

Designed by Graham, Anderson, Probst & White, the building was completed in 1928 as home to the Gimbel Bros. department store. According to the Philadelphia Business Journal, a $40 million renovation that included new elevators, electrical and ventilation systems and other major improvements was completed in 2000 by a partnership involving Trimont Real Estate Advisors and Lehman Brothers. Five years later, the asset was purchased by Digital Realty Trust for $59 million.

Source: CP Executive