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Another massive office property in the heart of Philadelphia is now in receivership.
With the debt backed by office and parking garage portions of the Wanamaker Building past due, Wilmington Trust put a receiver in charge of the property as part of foreclosure proceedings initiated in August, the Philadelphia Business Journal reports.
Wilmington Trust is acting on behalf of investors in the CMBS loan backed by the building, which has an unpaid balance of $112M, PBJ reported. The bank was granted an emergency petition to name Trigild IVL as receiver for the Wanamaker on Sept. 6 in the city's Court of Common Pleas.
Majority owner Rubenstein Partners took out a $124M loan against the Wanamaker with Natixis Real Estate Capital after purchasing its stake in the building in 2017, PBJ reported. Natixis securitized the loan in 2018, and it came due in June after Rubenstein failed to exercise an extension option, according to court documents.
Rubenstein sold the 435K SF Macy's department store that occupies the first three floors to TF Cornerstone in 2019, leaving 954K SF of offices above it and a 660-spot parking garage below as collateral for the loan. Rubenstein has until Oct. 24 to respond to the foreclosure complaint, PBJ reported.
In the time since Rubenstein bought the Wanamaker, the historically protected building has bled tenants. After losing nearly 500K SF of occupancy due to departures by the General Services Administration and Children's Hospital of Philadelphia in 2020 and 2022, respectively, the Wanamaker's net cash flow dropped to $4.6M, PBJ reported. The building's debt service payment for the same year was $6M.
In July, the Wanamaker's largest remaining tenant, advertising firm Digitas, agreed to relocate to the Bourse building in Old City when its lease expires next year. That will drop the Wanamaker to 36% occupancy.
1500 Market, one of the few office buildings in Philadelphia larger than the Wanamaker, has also been in receivership since April after Nightingale Properties failed to secure its own extension.
But the Widener Building, another historic property that sits across a narrow alleyway from the Wanamaker, was spared from foreclosure in July after its owners paid the remaining balance on its CMBS loan in full.
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