Former Mack-Cali Realty Corp. chief executive officer Thomas Rizk is betting that suburban office parks still have some life left in them with the $245.3 million acquisition of a 41-building corporate center in Horsham.
Workspace Property Trust (WPT), of which Rizk now is chief executive, bought the Pennsylvania Business Campus from Malvern's Liberty Property Trust, the companies said in separate releases Friday.
It is WPT's first step toward building a portfolio of suburban real estate in the northeastern United States, Rizk said.
Office tenants and developers increasingly favor urban areas over some suburbs. Liberty sold the Horsham business park in a strategy to sell suburban properties to focus on cities.
"This is a counterintuitive play," Rizk said. "You'll read a lot of articles about how millennials want to live and play in the cities. While we think there is probably truth to that, we believe it is probably exaggerated."
The portfolio includes 2.4 million square feet of interior space and 20 acres of buildable land, Liberty said. Tenants include United Healthcare Services Inc. and Comcast Corp., which performs back-office tasks at the site, Rizk said.
The Horsham transaction follows the July sale of a three-building complex in Wayne and brings year-to-date asset sales to $536 million, Liberty said.
Other companies shedding suburban assets in favor of a focus on central Philadelphia include Brandywine Realty Trust, which recently sold five Mount Laurel office buildings.
The Horsham market is due for a hit from the impending closure of Philidor Rx Services L.L.C. amid allegations of financial improprieties. The mail-order pharmacy leases 200,000 square feet at three buildings in the Pennsylvania Business Campus, Liberty spokeswoman Jeanne Leonard said.
But Rizk, who served as chief executive of Edison, N.J.-based Mack-Cali until 1999, remained confident about Horsham, which he said offers a high living standard with a strong sense of community.
The business park acquisition was financed with a $200 million loan from JPMorgan Chase Bank N.A., Horsham-based WPT said. The company is considering the full redevelopment of two properties and may upgrade others to Class A offices in the near term, Rizk said.
"We get these properties for a reasonable price at a time when the investment community feels they may be less valuable," he said. "We feel there's real value in those assets."