At the height of the coronavirus pandemic, Piedmont Office Realty Trust has managed to get 1901 Market St. under agreement for $360 million.
Known better as the headquarters for Independence Blue Cross, the 45-story, 801,000-square-foot office tower was put on the market in late February and was expected to trade for an estimated $370 million. Piedmont said in a statement that it entered into a binding contract to sell the building for $360 million. The sale is supposed to close this summer, the company said.
No additional information was available, including the name of the prospective buyer.
If the building sells at $360 million, or roughly $450 per square foot, it will be one of the top transactions for a Philadelphia office building on a per-square-foot basis. However, it wouldn’t break the record of $628 per square foot set by the 2018 sale of GlaxoSmithKline’s headquarters at the Philadelphia Navy Yard.
The building was developed in 1987 for Independence Blue Cross, which has a long-term lease on the space until 2033. It has two 10-year options to remain in the space.
The pending deal highlights how some investors continue to scout for deals during the pandemic, and underscores the attractiveness of top-tier properties leased to big-name tenants over the long term.
Piedmont, an Atlanta-based real estate investment trust, bought the building in 2003 for $174 million and in recent years invested $100 million to upgrade the lobby, build out an outdoor plaza and install new mechanical systems. The real estate company also renovated the building’s floors to a more contemporary style and added cafés and other gathering areas.
Atlanta-based Piedmont (NYSE: PDM) focuses on acquiring buildings leased on a long-term basis and most often to single tenants. This is the only building the company owns in Philadelphia and its focus has shifted to the Sunbelt markets of Atlanta, Orlando and Dallas. It said on a Feb. 5 fourth-quarter earnings call that it planned to dispose of 1901 Market and use the “anticipated gain” from the sale of the building to help fund a $400 million acquisition in Dallas, which will become its second-largest market based on revenue.
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