As developers clash over the future of the Bourse, their lender wants to force a sale of the building
The future of the long troubled building is still in question.
A New York City-based commercial real estate lender has asked a federal judge to force a sale of the Bourse building on Independence Mall after work ground to a halt on a hotel development amid the dissolution of the a partnership between real estate magnate Dean Adler and Keystone Development + Investment.
As the two former partners fought a battle for control of the Bourse in Delaware Chancery Court, the property has racked up millions in liens and missed at least one mortgage payment.
The lender, KKR Real Estate Finance Trust, says it is owed more than $24 million in the latest turn in the legal drama surrounding the 131-year-old Beaux Arts building.
In June 2024, KKR Real Estate Finance Trust lent Lubert-Adler Real Estate Funds and Keystone $83.7 million to purchase the building and convert a portion of it into a hotel, according to a lawsuit filed July 28 in federal court for the Eastern District of Pennsylvania.
The loan also funded the purchase of 400 Market St., which was developed as planned.
The loan agreement required Adler’s development team to show that the hotel project was near completion by the end of May 2026. But earlier this year, the Bourse’s development team “abandoned its plans to redevelop a portion of the Bourse property into a hotel and ceased work on the hotel conversion,” the complaint says.
Adler had decided to scrap the hotel and event space plan and his partnership with Keystone, the Philadelphia Business Journal reported in April. Instead, Adler said he planned to go into business with PMC Property Group, Philadelphia’s largest apartment owner, to convert the Bourse into a multifamily property.
Keystone filed a breach of contract suit and accused Adler of failure to provide promised funding for the project. Adler, in turn, accused Keystone of unauthorized spending and “gross negligence.”
The two are fighting in Delaware Chancery Court for control of the property and its future. In a March ruling, reported by Law360, a judge ruled against Adler’s attempt to oust Keystone.
The legal conflict between the two former partners has put KKR Real Estate Finance Trust’s investment at risk. By abandoning the plan and stopping construction, the suit says, the Bourse’s development team defaulted on the mortgage with more than $24 million of the principal outstanding.
The Bourse’s owners also racked up more than $2 million in liens filed by at least five contractors for failure to pay for their work and failed to make a mortgage payment starting in June.
KKR Real Estate Finance Trust is asking a federal judge to issue a judgment of $24.2 million plus interest and fees and to order a public auction of the Bourse building to pay back the debt.
Keystone declined to comment on an active lawsuit, but a spokesperson said the firm remains “confident” that it will prevail in the litigation against Adler in Delaware Chancery Court.
For his part, Adler said that he believes the legal cases with Keystone will soon be concluded and that KKR will follow.
“I believe we are near resolution on the Bourse lawsuit with Keystone,” he said. “And then we will resolve KKR’s potential foreclosure and be ready to revitalize the Bourse like we did at 400 Market.”
The former development partners purchased the nearby office building at 400 Market in the same deal as the Bourse and successfully converted it into apartments. KKR Real Estate Finance Trust made clear that building is not included in the lawsuit.
