Equitable nets $16.25 million on office building sales
Bill Yingling

FORT WASHINGTON--Berwind Property Group Inc. purchased two midrise office buildings in Montgomery County for $16.25 million. They had been on the market for less than a year.

Known as the Maplewood Office Center, the buildings at 1300 and 1301 Virginia Drive offer about 202,000 square feet and had been owned by Equitable Life Assurance Society of the United States and Equitable Variable Life Insurance Co., both of New York.

Equitable divested the properties as part of a normal adjustment of its portfolio, said Robert J. Fahey Jr., a broker for Cushman & Wakefield of Pennsylvania Inc., which represented the seller.

Fahey negotiated a selling price of $80 per square foot.

"I think we achieved an excellent price for our client," he said.

But he added that the market was working in the seller's favor. "The cycle is clearly on the upswing. It's a great time to be selling suburban office buildings."

High-quality buildings are worth about 25 percent more today than they were three years ago, Fahey said.

"We were attracted to the investment because of its excellent condition, strong tenant roster and the resurgence of the Montgomery County office market," said Arthur P. Pasquarella, executive vice president of Berwind Property Group.

Some of the tenants include Allstate Insurance Co., GMAC Mortgage Corp. and Cardinal Publishing.

Financing for the deal by an undisclosed life insurance company was secured through Steven Doherty of Legg Mason Real Estate. Joseph F. Mullen, vice president of Berwind will serve as the asset manager.

The buildings in the Fort Washington Industrial Park were built in the early 1980s. Equitable acquired them in the mid-1980s.

The buildings, which are about 98 percent occupied, are now collecting rents at $16 per square foot plus electric. The rate is generally below the market.

Charles "Kim" White, another Cushman broker who worked on the deal, said prospect of rent increases soon was a strong selling point. "The buyer saw upside potential when the leases start rolling in the future," he said.

Most of the leases are expected to come up in the next two or three years.

The building had been managed by Compass Management & Leasing Inc., an arm of the prior owner, Equitable. But starting Jan. 1, the building will be managed by BR Management, a unit of Berwind, said Michele Beyrer, area operations manager for Compass. "If they had outsourced it, I think we would have had a good shot at it," she added.

[NAI] Geis Realty is serving as the leasing agent.