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GlobeSt.com UPDATE: One Mellon Center Deal Comes in at $185M

PITTSBURGH, PA-The landmark building here is master leased to Mellon Financial, which recently extended its lease through 2028. The aggregate value of the lease is $551.7 million.

By Brian K. Miller | Updated on July 14, 2005

PITTSBURGH, PA-Philip Morris Capital Corp. recently closed on its sale of One Mellon Center, this city’s second-largest office building. Metropolitan Life Insurance Co. paid about $185 million for the 1.5 million-sf 54-story class A office building, industry sources tell GlobeSt.com.The building is master leased to Mellon Financial, which recently extended its lease through 2028. GVA Williams’ broker James Murphy brokered the lease extension and the sale with fellow GVA broker Alexander Jinishian. He declined to confirm the sale price, but did say the new bondable lease extension, which took 18 months to negotiate, begins in 2008. In early June , industry sources told GlobeSt.com the property could sell for $140 per sf. At $185 million, the sale price was closer to $125 per sf. Mellon occupies 1.1 million sf for its world headquarters and subleases the remainder, which includes 130,000 sf of retail on three levels and 270,000 sf of office. According to the lease agreement, Mellon will pay $62.92 million per year through 2008–all of which will go toward debt service, according to a source familiar eith the deal–and then $15 million per year thereafter. The aggregate value of the lease is $551.7 million, according to public documents.

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