Renewed Cigna lease prompts Two Liberty owner to explore sale

Cigna Corp. has decided to keep its Philadelphia office space in Two Liberty Place, prompting the owner to explore selling the Center City skyscraper.

“The early renewal of Cigna at Two Liberty Place secures the asset’s anchor tenant through 2027 at a positive mark-to-market,” said M. Jayson Lipsey, chief operating officer of Parkway Properties Inc., in a statement. “With this important renewal, we have further stabilized the asset and believe we are well-positioned to exit Parkway’s one remaining non-core market.”

The insurance company signed a 12-year lease on 322,000 square feet at the 16th and Chestnut streets tower, where it has made its home since 1990.

Under the new agreement, Cigna reduces the amount of space it had occupied. It had been in 450,000 square feet. Under the new lease, Cigna will occupy 34 percent of the building through October 31, 2027.

The deal ends speculation that has swirled around what the company was ultimately going to do with its office space in Philadelphia.

Cigna's lease was scheduled to expire in a year and it had been considering its options for well over a year. The company also became an even bigger wild card when Anthem Inc. decided to acquire the insurer.

Parkway Properties Inc., the insurance company's landlord at Two Liberty, expects Cigna to vacate the space it did not renew at the end of next May. Two Liberty is roughly 90 percent occupied, accounting for the reduced amount of space that Cigna took.

With the lease completed, it leaves little uncertainty with the skyscraper's occupancy on a long-term basis and is prompting Parkway Properties to explore selling the building.

Parkway Properties (NYSE:PKY) of Orlando, Fla., focuses on owning office properties in top markets throughout the Sunbelt and Philadelphia is not considered to be one of its primary markets. The office portion of Two Liberty includes the first 36 floors totaling 938,776 square feet. Parkway inherited a 19 percent interest in the tower as part of a 2011 acquisition of another real estate company that had an ownership interest in the building.

Parkway Properties is not affiliated with Parkway Corp., the private Philadelphia-based owner of parking garages and surface lots.

Source: Philadelphia Business Journal