PHILADELPHIA-Brandywine Realty Trust will acquire the Center City trophy office towers One and Two Commerce Square for $331.8 million, contingent on the merger of Parkway Properties Inc. and Thomas Properties Group.
Parkway and Thomas announced this morning that they will merge (see story here). The deal is expected to close by the end of the year, but requires stockholder approval for both companies.
Brandywine currently owns a 25% preferred interest in Commerce Square and will acquire the remaining common ownership interests from Thomas, once the merger occurs. Two existing mortgages totaling $238 million have first priority; Brandywine will pay the other $69 million in cash to the merged company.
Commerce Square consists of two 41-story towers that comprise a full city block on Market Street between 20th and 21st Streets. They have a total of 1,896,142 square feet. Built in 1987 and 1992, the towers were extensively redeveloped to achieve LEED-Silver status.
The property includes a central plaza, The Court at Commerce Square, including ground-level retail, restaurant space and a 525-space underground garage.
Brandywine is to assume full management responsibilities, including leasing of the property, when the sale transaction is completed.
"This transaction enables us to acquire two of Philadelphia's trophy-class CBD properties at a significant discount to replacement cost," said Brandywine president and CEO Gerard H. Sweeney. He said Commerce Square is currently 88% leased.
Brandywine, which has been selling off its non-core assets to focus on urban and town-center properties, said it has also agreed to acquire a town-center property in Austin from Parkway as the merger occurs.
Brandywine will pick up the Four Points Centre and an adjacent 19-acre land parcel for $51 million. Four Points Centre includes two three-story buildings in Austin's northwest submarket and totals 193,862 square feet. The two LEED-Gold buildings were built in 2008 and are currently 100% leased.
The adjacent land is valued at $9 million and approved for development of up to 480,000 square feet of office space. The acquisition is subject to a 45-day due diligence period, customary closing conditions and the completion of the merger between Parkway and Thomas.
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