The ornate South Broad Street skyscraper known as the Wells Fargo Building has come under new ownership in a deal involving a Europe-based private equity firm that values the 30-story high-rise at $100 million.
The transaction, which closed Tuesday, reunites the 123 S. Broad St. building — which had been divided between its fifth and sixth floors with separate owners — as a single property for the first time in almost two decades.
"We're trying to make it less complicated," said Pete Soens, a partner with commercial property firm SSH Real Estate, which had owned the building's top 25 floors with investment group Young Capital LLC since April 2008, but until now, not the lower floors.
Under the newly closed deal, SSH and Young, both of Philadelphia, joined Luxembourg-headquartered Quilvest Private Equity to acquire the bottom five stories and two basement levels of the building from New York-based investor Jack Resnick & Sons.
The deal also brought in Quilvest as a partner in the top section of the building, giving the three firms shared ownership of the entire 880,000-square-foot high-rise. A release from the three firms characterizes the deal as "a $100 million recapitalization" of the property.
"We always thought that if and when [the lower stories] became available for sale, we wanted to buy and consolidate under common ownership," Soens said. "That would enhance the value under a more traditional structure."
The 123 S. Broad St. high-rise was completed around 1928 as the Fidelity-Philadelphia Trust Co. Building. It is now known for its cavernous Beaux-Arts bank lobby, where Wells Fargo displays artifacts from its early history, as well as for its cameo in the 1983 film Trading Places, where it served as headquarters to the fictional Duke & Duke bank.
Its fractured ownership dates to 2000, when Wells-predecessor First Union Bank leased a large block of space spanning the bottom floors of the 123 S. Broad St. building and those of the adjacent Witherspoon Building at 1319-1323 Walnut St., with which it had consolidated decades earlier.
The buildings' then-owner, American Financial Realty Trust, broke those bottom floors into a separate unit to sell off as a single-tenant property promising years of steady rental returns. It was acquired by Resnick, while SSH and Young later acquired the upper stories.
Since then, Wells Fargo's presence on the buildings' lower section has receded, leaving the 121-year-old Witherspoon Building vacant. The upper section's biggest tenant, law firm Montgomery McCracken Walker & Rhoads LLP, meanwhile, has announced that it would be vacating the 110,000 square feet it occupies on floors 24 through 30, which will bring the full building's occupancy below 80 percent.
Now that the building is under common ownership, however, its vacant space will be easier to market, said Barry Hammerman, a partner with Quilvest, which is making its first foray into Philadelphia with the deal.
"It creates additional flexibility to attract tenants as we look to reposition the building," he said.
Possible plans for drawing new tenants include revamping into an event space the building's top two floors, a soaring space with high windows and grand chandeliers that once housed the Midday Club private eating establishment.
Hammerman said Quilvest, which holds property in Atlanta, southern Florida, Colorado outside Denver, and parts of Manhattan, was attracted to the Wells Fargo building because of its central location and ability to attract creative-minded tenants with its finely wrought architecture and finishes.
"When we look at buildings, we want them to be unique," he said. "We think this fits the bill."
Also under the deal, SSH and Young — but not Quilvest — will share ownership of the newly reunified 155-square-foot Witherspoon Building. The two plan to redevelop the historic structure into residential units.