PHILADELPHIA-Pennsylvania Real Estate Investment Trust has acquired a 430,000-square-foot building at The Gallery at Market East on Market Street for about $60 million.
The six-story structure at 907 Market St. sits between two other buildings owned by PREIT at the retail complex. The purchase price was $59.6 million, with credits on in-place net operating income and a capitalization rate of 5.7%. PREIT paid cash in part, and also secured a $10 million note with 5% interest rate that is pre-payable at any time.
“As we contemplate vehicles for future growth, we feel The Gallery at Market East represents a significant opportunity,” said Joseph F. Coradino, CEO of PREIT, in a release. whose lease expires in 2014.
He said the acquisition is the final step in PREIT's assemblage of three blocks of prime Center City real estate. Philadelphia, he noted, is the nation's sixth largest MSA.
The building at 907 Market has 211,000 square feet of office space, about 69,000 square feet of it currently vacant. There is 219,000 square feet of retail space, with only about 12,000 square feet vacant. Kmart occupies the majority of the retail space.
The building is 81.2% occupied.
PREIT, founded in 1960 as one of the first equity REITs in the country, has a currentportfolio of 46 properties: 36 shopping malls, seven community and power centers, and three development properties. The Company's properties are located in 13 states in the eastern half of the United States, primarily in the Mid-Atlantic region.
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