On Thursday, March 8, ULI Young Leaders hosted Case Study of a Deal. This educational event was the first in a three-part series that will bring in the professionals behind some of Philly’s recent real estate projects to lead candid discussions that highlight all phases of the real estate development process. Thursday’s event focused on the Acquisition and Financing phases of the Chestnut Street deal, better known as The Collins– 112 loft-style apartments and 90,000 SF of multi-level large format retail space on the 1100 block of Chestnut St. Presenters were John Connors, President of Brickstone Realty Corp., Jessica Goss, Asset Manager at JP Morgan, and Laura Rossi, Vice President at Santander Bank.
In 2012, before The Collins was built, the 1100 block of Chestnut Street was “the hole in the donut”– surrounded by the Jefferson Medical campus and strong retail and restaurants in Washington Square and Midtown Village, the 1100 block was no-man’s land. Pedestrian counts in 2012 showed 8,000 pedestrians on the block per day, and after demolition of existing buildings took place to clear the way for The Collins, pedestrian traffic actually increased by 50%. John Connors met with many potential equity partners before JP Morgan signed on to the project. He complimented JP Morgan on their willingness to underwrite the emerging Midtown Village submarket and invest with Brickstone on a project that was pioneering at that time. Jessica Goss emphasized the importance of relationships and leveraging JP Morgan’s multi-family expertise to benefit The Collins.
The Collins represents one of the first large-format retail spaces in center city. John Connors admitted in hindsight that they had underestimated the demand- especially from the Jefferson campus- for this type of retail. Target has trouble keeping their shelves stocked, and other retail tenants have been very successful.
Laura Rossi, who worked with Brickstone to finance the deal, stressed, “I can’t say enough about Brickstone being their own advocate and providing us with information.” Since the developer generally knows the project and the market better than anyone, it’s to their advantage to provide comps, market analysis, and other information to tell the story of the project and why they know it will be successful. This holds true for providing appraisers with information, including as much information about the ecosystem of the specific market as possible.
Laura Rossi lives in the city and knew the 1100 block of Chestnut Street well. She stressed that “relationships are key”- between the financier and the bank, as well as between the bank and the developer. Brickstone had worked with JP Morgan in the past to finance other larger projects. One challenge was that Brickstone only had letters of intent from potential retail tenants at the time of the loan, which is typically against the bank’s practice. However, because of the bank’s trust in Brickstone as the developer and JP Morgan as the financier, Santander was willing to find a work-around for this hurdle to close the deal.
The Case Study of a Deal event sold-out soon after being offered: ULI capped attendance in order to promote an intimate and casual environment where participants felt free to ask plenty of questions. The second installment of this program will be held on April 5th and will focus on the leasing phase of a deal. Register soon– this event will likely sell out, too!
Register soon– this event will likely sell out, too!
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Rachael Griffith currently serves as the trails and open space planner at Chester County Planning Commission. Rachael graduated from Temple University with a Bachelor’s Degree in Landscape Architecture and is currently pursuing a Masters in Public Administration from the Fels Institute of Government at the University of Pennsylvania.