Philadelphia master lease development up for sale

US: A development site in Philadelphia’s Rittenhouse Square neighbourhood that is master leased to short-term rental / aparthotel firm Sonder is up for sale.

The site at 1620 Sansom Street is owned by New York City-based Bridge Funding and is being marketed for sale by Rittenhouse Realty Advisors (RRA). The property is currently mixed-use with an existing 300-space parking garage situated under a designated space for 208 apartments to be constructed and master leased to Sonder.

Bridge Funding says it wants to secure either a joint venture or an outright sale, with RRA managing partner Ken Wellar calling the development venture a ‘very unique opportunity’.

Wellar told GlobeSt.com: “1620 Sansom Street is the first of its kind in which the site is being sold based on the master lease. It is also one of the last remaining CMX-5 parcels left to develop in Rittenhouse Square.”

It is another sign that Sonder is seeking to grow its rapidly-expanding footprint in Philadelphia. Rittenhouse Realty senior associate Chris Egan and associate Seth Douglas recently sold a 15-unit apartment building in the Old City neighbourhood of Philadelphia at 222 Vine Street, which also has a master lease in place with Sonder, to an out-of-state buyer.

Douglas said: “Sonder sees the value in Philadelphia’s growth as a ‘Meds & Eds’ city that brings increased popularity and demand to both the traditional hotel and short-term rental markets.”

Egan said: “The sale further illustrates the trend of out-of-town investors seeking tremendous value in the Philadelphia market. Sonder’s master lease bridged the gap between the developer’s otherwise potentially lengthy lease-up period and the buyer’s 1031 timeline to acquire the asset.”