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Brandywine Selling Cira Square In W. Philadelphia for $354 Million

Updated: REIT Harvests Value In Sale of Landmark IRS Building Along Schuylkill River; Announces Disposition of Four Non-Core Properties in CA, DE and PA
December 28, 2015
Brandywine Realty Trust (NYSE: BDN) announced an agreement to sell its interest in Cira Square, the former U.S. Post Office Building in Philadelphia’s University City submarket, for $354 million, or $410 per square foot. It's the largest in a series of office dispositions announced by the Radnor, PA-based REIT.

The sale and purchase agreement with KIM TopCo Inc., an entity managed by Korea Investment Management Co., Ltd., of the 862,700-square-foot Cira Square property, fully leased to the U.S. General Services Administration and occupied by the Internal Revenue Service, is expected to close by February. Brandywine acquired the 1940-vintage landmark building at 2970 Market St. from the University of Pennsylvania in 2007 for about $28 million and launched a $220 million redevelopment before the IRS occupied the property rebranded as Cira Square in 2010.

The Philadelphia Inquirer identified the buyer as a fund managed by Seoul-based Korea Investment Management Co.

Brandywine also last week announced the sale of three office properties totaling 196,100 square feet in Carlsbad, CA, for $30.4 million, or $155 per square foot (CoStar COMPs #3471996); a 1.6 acre development site at 2nd and King Streets in Wilmington, DE, for $6.5 million; and a flex/office property totaling 158,000 square feet in King of Prussia, PA for $4.6 million, or $29 per square foot (COMPs #3469505). The King of Prussia property will be fully vacant on Jan. 1, 2016 and is being purchased by an owner/occupant.

After paying off $212.9 million in mortgage debt, Brandywine expects to receive $124.5 million of net proceeds, which it expects to use to fund current developments, reduce debt and general corporate purposes.

"The transactions reinforce our stated goals of prefunding our development pipeline and further improving our financial capacity through accelerated dispositions," says Gerard H. Sweeney, president and CEO.

While Brandywine created and is now harvesting returns from Cira Square, the sale of the other assets represents the REIT's ongoing effort to dispose of non-core assets, Sweeney noted, adding that the company expects additional assets sales before the end of the first half of 2016.

In August, a joint venture of Brandywine and DRA Advisors sold a 29-building, 1.6 million-square-foot suburban office portfolio in the Philadelphia area to Brookwood Financial Partners for $184.25 million, or $114 per square foot.
Editor's note: This version updates with the name of the prospective buyer of Cira Square.
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