In what could be one of the biggest real estate deals of
the year, Equus Capital Partners Ltd. is seeking to sell off the office portion
of Ellis Preserve in Newtown Square, Pa.
Ellis Preserve is a mixed-use development on 218 acres at
Route 252 and Route 3 and is considered one of the more unique pieces of
commercial real estate in the region.
Just the office segment of the development is being put
up for sale and that involves 13 buildings totaling 596,000 square feet of
space on roughly 40 acres, according to sources. The space is fully occupied
more than two dozen tenants such as Sunoco Co., PetPlan and Main Line Health.
Why Equus would look to sell the office portion of Ellis
Preserve couldn’t be determined. The private real estate firm has developed the
entire property with a local partner. A contact at the Philadelphia company
couldn’t be reached for immediate contact. It also couldn’t be immediately
determined how much the portfolio might sell for.
In 2005, it unloaded a 130,000-square-foot building that
was fully leased to Main Line Health for a record-setting $388 a square foot.
Though that was a big transaction, it shouldn’t be used as a direct comparison
since it’s a single-tenant building leased on a long term basis. If anything,
however, the appetite for fully leased office properties in campus-like
settings where amenities are plentiful are appealing to investors.
There have been some large portfolio sales recently in
the suburban office market.
Last year, Brookwood Financial Partners bought a
29-building office portfolio, of which most of the building were in Fort
Washington, Pa., and Horsham, Pa., for $183 million.
Also last year, Work Space Property Trust paid $245.3
million to buy 41 buildings totaling 2.4 million square feet in Horsham. Back
in 2006, Pitcairn Properties, in a joint venture with a German real estate
mutual fund, bought Chesterbrook Corporate Center and Glenhardie Corporate
Center in Wayne, Pa., for $251 million. Those two centers were comprised of 17
buildings totaling 1.27 million square feet.
Equus bought the Newtown Square campus from SAP in June
2004 and embarked on a grand plan to create a special mixed-use community that
not only included new construction but also incorporated all of the existing,
historic structures on the property.
For 55 years, Ellis College made its home on the grounds.
The school was established by Charles E. Ellis, a local businessman, who left
in 1909 a majority of his estate for the creation of the Charles E. Ellis
School for the Education of Fatherless Girls. The school educated hundreds of
girls between 1922 and 1977.
When enrollment declined over the years and the school
faced financial difficulties, a court approved the sale of the original
450-acre campus, which was at one point registered as an arboretum because of
the more than 600 varieties of trees on the grounds. The sale took place in
1978 when Atlantic Richfield bought the Ellis property for $6.1 million. The
company built a two-story, 600,000-square-foot research and engineering
facility and Arco Chemical Co.’s world headquarters.
The site, under Arco’s ownership, remained shut off to
the public. Arco fenced in the property to ensure security for its corporate
and research facilities.
The property’s evolution didn’t stop with Arco.
In 1998, SAP AG, the German software company, bought 182
acres -- roughly half of the tract -- from Arco, exercising an option two years
later to buy the remainder of the property. It was in 1998 that Arco was bought
by Lyondell Chemical Co. of Houston.
When Equus came up with its plan to create what would
essentially be a little village, the entire project at build out was expected
to exceed $500 million to develop. Some of that work is just now coming to
fruition 12 years later.
Equus moved forward with leasing existing office space
and last year, the company decided to sell about 22 acres to Toll Brothers Inc.
(NYSE:TOL) for the construction of 76 townhouses that are expected to get
underway this year. It also started construction on a 51,000-square-foot Whole
Foods, a Hilton Garden Inn and a series of other retail and restaurant spaces.
Plans are also in the works for a new apartment complex and room for an
additional 700,000 square feet of retail, office and hotel space and those
portions of the property are not up for sale.
Source: Philadelphia
Business Journal
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