Center City office tower secures extension on $162.5M loan, creating 'competitive advantage'
The 39-story, 825,968-square-foot office tower at 1600 Market St. secured a four-year loan extension.
American Real Estate Partners has extended its $162.5 million loan for 1600 Market St. by four years, a critical deal for the financial health of the property despite challenges facing the office market.
The firm extended the loan to 2028 in partnership with senior lenders Natixis Corporate and Investment Banking and BlackRock and mezzanine lender JPMorgan Chase.
As the loan approached its maturity, the 70%-occupied office tower faced a key juncture. McLean, Virginia-based AREP bought the 39-story, 825,968-square-foot building for $160 million in 2018 from Chicago-based Equity Commonwealth. Three years later, the company completed $15 million worth of upgrades including the building’s entrance and lobby, air quality and fitness center. The building was built in the early 1980s.
As part of the extension, AREP said it agreed to make a “significant additional equity investment” in the building. That investment is meant to fund tenant improvements, which can help lure prospective tenants to the building. Extending the loan now secures the financial health of the building for four more years, a milestone for AREP, especially given how lenders have tightened their exposure to office loans.
“This is without a doubt a competitive advantage for us just because of the challenges other landlords are having,” AREP COO Paul Schulman said. “This is an extremely challenging environment for sure. So to have the stability, the tenants’ confidence in our ability to perform, is certainly a differentiator.”
PNC Bank occupies around 200,000 square feet and is the building's anchor. Law firm Cohen Seglias and engineering consultant HNTB also each lease around 38,000 square feet, representing the next largest tenants in the tower.
The building has about 240,000 square feet available. Just under 70,000 square feet became available when law firm Schnader Harrison Segal & Lewis dissolved in 2023. The space near the top of the building was Schnader Harrison’s headquarters.
Despite the vacancy, Schulman said AREP’s goal is for the renovations and future investments to result in the building being viewed among Philadelphia’s trophy class. The strategy has already begun to pay off as AREP has leased more than half of Schnader Harrison’s vacated space, Schulman said.
