1201 Chestnut Street Partners LP
Third Party Investment Sale
Market Research, Financial Analysis, Development, Property Management, Accounting, Legal, and Ownership Experience
201 Chestnut Street, Philadelphia, PA
98 Apartment Units with Ground-Level Retail
Tax Credit Financing. Income Not Yet Stabilized. Looming Real Estate Tax Reform. “Should I buy this Project?”
When many variables are in play, it can seem impossible to make a decision or move forward. SSH put its team to work to sort out the variables and offer a clear path to action.
The Commonwealth at 1201 Chestnut Street is a beautiful, historic, urban high-rise building that was developed into 98 luxury rental apartment units with retail at street level in 2011. The Investment Services Division at SSH was chosen to represent the owners of the project in finding a suitable buyer. However, there were multiple hurdles to overcome in selling this project:
- The project was still going through its initial lease-up phase while on the market for sale.
- The investment community was unsure how to underwrite stabilized expenses as there was no historical data to reference.
- It was funded through the use of Historic Tax Credit Financing which complicated both the ownership structure and financing of the asset.
- While the project was under agreement, the City of Philadelphia was in the midst of reassessing all properties which further muddied the expected return on investment for interested purchasers.
SSH Real Estate’s Investment Services Division met these challenges head-on thanks to valuable in-house resources available to handle the complex transaction. The investment team of Dan Mayock and Adam Gillespie consulted with SSH’s property management division which was able to provide expense comparables from the properties managed for third-party clients in Philadelphia and the surrounding suburbs. This information allowed investors to make an informed projection of stabilized operating expenses. In addition, in-house legal counsel was available to answer complex questions involving the ownership structure and Historic Tax Credit Financing. The company’s ownership experience also came in handy in advising potential buyers how, as owners, we were addressing the looming tax reassessment for the over two million square feet of commercial space owned in Philadelphia. Lastly, SSH’s construction management team was consulted during the due diligence phase of the sale to provide quick and reliable estimates for work that needed to be completed prior to closing the transaction.
The Investment Division produced seven offers for the project which enabled the seller to choose a buyer not only based on price and terms, but also on likelihood of closing the transaction. Ultimately, the transaction sold to INVESCO Real Estate of Dallas, Texas which made the investment on behalf of an international client at a consideration of over $30 million. Thanks to the multitude of resources available at SSH, what seemed to be a complex sale transaction turned out to be another example of what separates SSH’s Investment Sales Team from the competition—experience, knowledge and resources to bring a sale to a successful conclusion.Download Case Study PDF