In the wake of the Global Financial Crisis, we targeted opportunities to acquire deeply discounted mortgage-loan positions secured by well-located real estate, with the plan to either hold the debt until repayment by the borrower or take ownership via foreclosure or a negotiated deed in lieu of foreclosure transaction.
We acquired a defaulted first-mortgage loan, collateralized by two properties at 530 and 580 Swedesford Road in Wayne, PA, for 73% of face value.
The properties are located near the super-regional King of Prussia Mall, with good visibility off Route 202, in what is considered to be one of the best suburban office markets in Philadelphia.
The two major tenants at the properties had five years of remaining term and wished to vacate, which we saw as an opportunity to negotiate substantial early lease termination payment in both cases, paving the way to redevelopment.
Execution
We gained title through a negotiated deed in lieu of foreclosure in June 2011.
We implemented an extensive redevelopment program, combining the two properties and linking the two buildings with an atrium, creating a premier Class A office park.
Upon completion, we achieved a 95% leased-up of both properties at Class A market rents.
We sold the complex in August 2015 for approximately $330 per SF, a record breaking price at the time, to a public REIT.
