Redevelopment project funded in part by the City of Philadelphia
1/6/2016 | Real Estate Blog
Commercial real estate redevelopments are generally complex. There are many facets of the project that need to be addressed. One of those aspects is financing. Without this, a project cannot proceed. When a project is large, the amount needed can be great. Depending on the project the funds will be obtained from various entities. Recently, a financing deal in Philadelphia involving the city, was finalized. The project the city is funding is the Gallery mall.
The mall is being updated into an outlet retail center. During the redevelopment, the mall will be closed.
The transformation project, which is a joint venture between Pennsylvania Real Estate Investment Trust and Macerich Co., is expected to cost $325 million. Once complete, 125 stores are planned for the 1.5-million-square-foot space. The project is slated to take two years.
Of the $325 million, the state is providing $15.5 million. The Philadelphia City Council is providing an additional $90.5 million. Documents memorializing this were recently signed by PREIT the Philadelphia Redevelopment Authority and the city of Philadelphia. While there are likely multiple reasons why the city determined it was a good idea to invest in the project, one is the impact the project is expected to have on Center City.
According to the executive director of the redevelopment authority, its impact is expected to be a lasting one. This commitment is further illustrated in the city’s agreement to contribute another $58 million to pay for maintenance and repairs of common areas connected to subways and trains.
While funding arrangements for real estate purchases or redevelopments do not always involve such a large amount of money, it is always important they are handled correctly. A lawyer who has a thorough understanding of commercial real estate matters is beneficial in these situations.