In September 2016, Stockton Real Estate Advisors (“SREA”) and Miller Investment Management (“MIM”) partnered together on the acquisition of 3550 Market Street, a 77,619 SF medical office property located in the heart of University City
The Children’s Hospital of Philadelphia (“CHOP”) was the seller and nearly 100% occupant. CHOP executed a sale-leaseback, planning to give back floors 2 and 3 of office space subsequent to closing, while retaining all of their space on the ground floor and floors 4-5. During due diligence and prior to closing, CHOP agreed to only give back 1 floor of office space, retaining space on the ground floor and floors 3-5. Prior to vacating floor 2, CHOP agreed to retain 100% occupancy of the second floor and move all of their space on the ground floor to the second floor, allowing the new owners to refurbish the lobby and expand the building’s footprint adding 3,179 of additional rentable SF.
- Executed strategic capital improvements on the ground floor and building entrances to enhance building esthetic and curb appeal.
- Decreased the property’s operating expenses through focused property management services and competitive bidding.
- Provided landlord representation leasing services through professional leasing campaign aimed at retail tenants.
- Secured favorable financing terms allowing for the loan’s refinance once new retail tenants were acquired.
- SREA and MIM created 3,179 SF of additional rentable area to the building while achieving ground floor retail rents of more than 100% above the rent that CHOP had been paying.
- The ownership team has been able to improve operating efficiencies by decreasing operating costs for the tenants and increasing their ability to pay higher rents.
- The exterior and ‘street presence’ of the building was improved as well, ensuring a higher profile presence on Market Street.
- The financial stability of the investment has been ensured, with a long-term loan at favorable terms financing the property.