Judge clears Centre Square sale to PMC, Dean Adler

A judge approved the sale of Centre Square, the office complex at 1500 Market Street in Philadelphia. It spans 1.8 million square feet. Affiliates of PMC Property Group and Dean Adler are the buyers, the Philadelphia Business Journal reported. The sale is expected to close in about two months, with plans to keep some office space and convert much of the complex into apartments and hotel rooms.

The purchase price is $70 million. The same complex sold for $328 million. That was in 2017. Roughly $375 million remains on the CMBS loan that backs it. The East Tower has 36 stories. The West Tower has 43. Both have struggled with vacancy since their owners, Nightingale Properties and InverVest Capital Partners, fell into foreclosure in 2023.

The path to approval had its detours. Universal Group of Huntingdon Valley offered $75 million in cash in February and lost when CBRE's receiver rejected the bid. Universal moved to intervene, alleging the rejection was improper. New York's CSC Coliving bid $80 million and then backed out. After those rivals fell away, PMC and Adler tried to back out. CBRE pushed back. The judge approved the sale anyway, finding 'no just reason for delay.' The ruling likely spared the buyers from forfeiting their $5 million nonrefundable deposit.

The buyers have disclosed plans for a partial conversion from offices to apartments and hotel rooms. That includes about 500 apartments. It also includes about 300 hotel rooms. Adler is separately pursuing Franklin Mall, an 80-acre mixed-use project. The project includes 250 workforce-housing units, a waterpark and a youth sports complex. He plans to keep Walmart and Sam's Club as tenants.

The new price is about 79% below the previous sale. It also comes to roughly 19 cents on the dollar against the remaining CMBS debt. On that basis, the apartment-and-hotel conversion has room to work.