SSH Real Estate and Young Capital, in partnership with the real estate arm of Quilvest Private Equity, today announced a $100 million recapitalization of the 880,000 square foot 123 South Broad Street and Witherspoon Building complex. Located in the heart of Philadelphia’s Central Business District, the property consists of the entire block on Broad Street from Walnut to Sansom Streets.
SSH Real Estate and Young Capital purchased floors six through 30 of 123 South Broad Street in March 2008. The partnership immediately embarked on a capital and leasing program, updating the building’s mechanicals to reduce operating costs and undertaking repairs to the façade and interiors to achieve Class A standards. Over a four-year period, the aggressive leasing strategy successfully repositioned the property and increased occupancy from 79 percent to 95 percent. Wells Fargo is the anchor tenant with 225,000 square feet of space across multiple floors. The building is the headquarters of SSH Real Estate’s 60-person team, and boasts a diverse mix of over 50 professional companies and non-profits.
Along with Quilvest – an international wealth manager and private equity investor with $36 billion in assets under management – the new partnership plans to invest capital to renovate the lobby and other common areas, create new best in class tenant amenities and accelerate the current leasing momentum. Over the last year, the property has signed 11 new tenants totaling more than 75,000 square feet, and the property continues to attract creative users, innovative technology firms and traditional office tenants, such as Finch Brands, Design Science and Neumann Finance Company.
“We are excited to partner with Quilvest, an institutional investor with international real estate acumen. Quilvest’s investment and the new financing will enable us to complete our vision to make 123 South Broad Street the premier historic office building in Philadelphia,” said Peter Soens, partner of SSH Real Estate. “The building’s unique footprint allows us to easily accommodate tenants of all sizes from pre-built, 1,000 square foot suites to as much as 100,000 square feet across multiple floors. With top floors – 24-30 – available in June, we are excited to be able to offer best in class beautiful high ceiling space with incredible views along the Broad Street corridor.”
With capital allocated for building and tenant improvements, including upgrading the lobby and commons areas, the partnership is also exploring repositioning the building’s two-story dramatic penthouse space – once home of the historic Midday Club – into a unique hub for business collaboration, signature events and socializing. A possible panoramic roof deck is also being considered.
“Center City Philadelphia represents a strong strategic growth market. SSH Real Estate has intimate knowledge of the building and a proven track record of leasing success and excellence in property management,” commented Barry Hammerman, partner of Quilvest. “123 South Broad Street is a legendary building with an ideal location and strong tenant base. The property is now extremely well-positioned to capitalize on the robust leasing market by providing next generation office space within a Philadelphia landmark.”
The complex was previously split into two condominium units with separate ownership: Unit 1, composed of 255,000 square feet of the basement through fifth floors of both 123 South Broad Street and the Witherspoon Building and Unit 2, composed of floors six through 30 of 123 South Broad Street and six through 11 of the Witherspoon Building, totaling 625,000 square feet.
The new partnership acquired Unit 1 earlier this year. Now with Quilvest Real Estate’s investment in Unit 2, for the first time in 20 years, the 725,000 square foot 123 South Broad office building will be under common ownership. As part of the transaction, the partnership secured a loan facility from Guggenheim Commercial Real Estate Finance, which includes significant capital to complete the anticipated leasing and capital improvements planned for the building. HFF served as the broker for the financing.
Constructed in 1927, when it was the ninth largest building in the world, 123 South Broad Street is a pillar of the city’s rich business legacy. The building boasts a 405-foot Beaux-Art style limestone façade, a beautiful three-story marble lobby and a unique “H” floorplan that provides up to eight corner offices per floor, with industry-leading ceiling heights, tremendous natural light and unobstructed views of Philadelphia.
As part of the new transaction, SSH Real Estate and Young Capital acquired complete ownership of the Witherspoon Building, a boutique 155,000 square foot building with an entrance on Juniper Street. The partnership is evaluating the building for a residential apartment conversion.
About SSH Real Estate
SSH Real Estate is a 60-person, vertically integrated, full-service real estate company serving the Greater Philadelphia Region. Since firm’s founding in 1952, it has evolved from a one-person operation focusing on leasing storefronts and manufacturing spaces, to one of the largest privately-held commercial real estate companies in the region with services in brokerage, property management and investments. The company manages more than 6 million square feet of commercial & multi-family properties and has invested in 2.4 million square feet of real estate representing $350 million in market value.
About Young Capital
Young Capital, LLC, is a family investment vehicle that was founded in 1999 by Michael Young to structure investments in various commercial properties. Today, Young Capital maintains ownership interest in 2.2 million square feet of office and retail space throughout seven buildings located in Center City, Philadelphia and Washington, D.C.
About Quilvest Private Equity
Quilvest Private Equity is the private equity and real estate investment arm of the Quilvest Group, a leading, global, independent wealth manager and private equity investor, with approximately $36 billion in assets under management and a presence in Europe, the Americas, Asia and the Middle East. Since 1972, Quilvest Private Equity invests in and accompanies private small and medium sized companies and real estate operators in their strategic development over the long term. With a team of nearly 100 professionals investing both directly into companies, real estate properties, private equity funds, and strategic partnerships and a global footprint (in Luxembourg, Paris, New York, London, Hong Kong and Dubai), Quilvest Private Equity manages approximately $5 billion of assets, including $1 billion of equity across multiple real estate strategies. Quilvest Private Equity offers investment opportunities to its private and institutional investors on a large range of direct investments, private equity and private real estate funds, and through strategic partnerships, with a total alignment of interests.
