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Keystone, Mack-Cali Team Up to Buy Philadelphia's Curtis Center for $125M

Walnut Street, Apollo Global Mgmt Sell 886,000-SF Office Bldg
June 9, 2014
A joint venture comprised of affiliates of Keystone Property Group and Mack-Cali Realty Corp. (NYSE: CLI) have acquired the iconic Curtis Center office building at 601 Walnut St. in Philadelphia's Center City from Walnut Street Capital and Apollo Global Management LLC for $125 million, or about $141 per square foot.

The 12-story, 885,786-square-foot office property was originally built in 1909 on a prominent site overlooking Independence Hall and Washington Square Park. Last renovated in 2007 shortly after it was last sold, the building's major tenants include various departments and government agencies.

The new owners plan to reposition the building as a mixed-use property, converting approximately 90,000 square feet of existing office space into 90 high-end rental apartments, while adding new corner restaurant spaces and landscaped outdoor seating areas. They may expand the housing component as office leases expire and additional space becomes available.

Keystone and Mack-Cali also plan to fund a capital improvement program to include updates to the property's elevators, HVAC system, roof, facade, and parking garage.

Curtis Center originally served as the headquarters for Curtis Publishing, which owned such titles as Ladies' Home Journal, The Saturday Evening Post, The American Home, Holiday, Jack & Jill, and Country Gentleman. Walnut Street Capital acquired the property in September of 2006 for $94 million, or $106 per square foot, according to CoStar data. See CoStar COMPS #1147723.

An affiliate of Keystone will manage the office and retail portions, while Roseland, a subsidiary of Mack-Cali, will design, construct, lease, and manage the new residential component.

The all-cash transaction is just the latest deal between Keystone and Mack-Cali. Earlier this year, Keystone agreed to buy a 2.3-million-square-foot portfolio of 12 office properties in Northern New Jersey, New York and Connecticut from Mack-Cali for $230.8 million.

Mitchell E. Hersh, president and CEO of Mack-Cali, commented, "Curtis Center offers us a unique opportunity to strengthen our multifamily presence in the heart of the growing Philadelphia housing market. Through our bold conversion strategy, this building is well positioned to capitalize on the upside of one of the region's most exciting hubs for entertainment, culture and transit."

Robert Fahey and Jerome Kranzel with CBRE represented the sellers. CBRE's leasing and management teams managed the building prior to the sale. The buyers handled the acquisition in-house.

Please see CoStar COMPS #3043600 for additional information on this transaction.

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