PHILADELPHIA, PA—Despite recent reports of Chapter 11 bankruptcy filings by three former fractional owners of 1818 Market Street, Sovereign Capital Management Group says the Center City Philadelphia trophy asset remains on solid financial footing with occupancy rates of more than 90%. The 37-story, class-A office building is in escrow for sale to San Francisco-based Shorenstein Properties.

Sovereign, apparently concerned about the minority owners' bankruptcy filings, issued a statement reaffirming the property's finances.

Before Sovereign's investment in the property in 2012, 1818 Market Street was suffering from low occupancy levels and a lack of capital. Sovereign says it implemented a disciplined turnaround strategy and partnered with the tenant-in-common or fractional owners of the building to recapitalize the asset. By the spring of 2013, regional bank-holding company Beneficial Mutual Bancorp and national retailer Five Below had both selected the granite and glass tower as their new corporate headquarters.

Sovereign says that after stabilizing the situation, it developed a plan for the sale of the property, but says that three of the 34 fractional owners of the building “breached their fiduciary obligations by attempting to interfere with the rights of the majority owners to sell.”

A California arbitrator ruled in December that the disposition plan for the building was proper, Sovereign says.

"It's unfortunate that these three former fractional owners have made the reckless decision to file a bad-faith bankruptcy in hopes of increasing their economic benefits," says Sovereign's CEO, Todd A. Mikles. "We continue to be pleased with the remarkable turnaround at 1818 and the pending sale to Shorenstein Properties."