MM Partners hoped to preserve a relic of Brewerytown’s industrial heritage, but its 132-unit adaptive reuse project with loft apartments and 25K SF of retail appears to have hit a major financial snag.
The almost $34.8M loan underpinning the Poth Brewery Lofts at 3145 W. Jefferson St. in North Philadelphia has gone into special servicing, according to a report from Morningstar Credit.
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MMP bought the historic building in 2018 and completed renovations in 2022. It has been delinquent on the loan for the property since August 2024, according to Morningstar.
“The loan is transferring due to payment default,” Morningstar wrote in an update attributed to CBRE Loan Services on Feb. 5.
MMP appeared to be covering just 42% of its debt service payments at the end of June 2024, Morningstar Head of Commercial Real Estate Analytics David Putro told Bisnow based on the report.
“It’s simply not generating enough cash flow,” he said of the mixed-use project.
MMP likely took out the loan to cover construction costs, with the idea of being able to pay it back with rent revenue and secure permanent financing down the road, Putro said. The building was 85% occupied in September 2024, up from 75% at the end of 2023.
The floating-rate loan, originated in August 2023, recently saw its interest rate hit 9.65%, according to the Morningstar report. It’s set to reach maturity in September 2025.
“They should have a rate cap in place that limits their exposure to some degree, but even with that cap, it’s going to be a higher interest rate than you’re typically seeing on commercial real estate,” Putro said.
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Parts of the Poth complex were built as early as the late 19th century, according to the building’s website. It was a manufacturing plant for the Poth’s Beer brand, which produced up to 180,000 barrels annually at its peak.
The company went out of business in 1937, and the structure was used for various purposes until the 1990s, when a different beer manufacturer called Red Bell turned it back into a brewery.
That company went out of business in 2002, and the building sat vacant until it was purchased by MMP 16 years later. The developer took advantage of federal historic tax credits and the opportunity zone program.
MMP did not respond to a request for comment, but the company’s co-founder did speak to Bisnow about the future of Brewerytown in 2016.
“Fairmount has been a very desirable place for 25 to 30 years, and people just want to be there,” David Waxman said at the time. “So Brewerytown has positioned itself as an authentic neighborhood for people who want to live in Fairmount but can’t afford it.”
At the time, he cited the neighborhood’s proximity to Philadelphia’s largest park as well as access to public transit and Interstate 76 as major factors working in its favor.
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