Union Trust Building excites latest suitor
By Ron DaParma
Friday, November 2, 2007
An investment group led by executives of the Mika Realty Group in Los Angeles said Thursday it hopes to complete the purchase of the historic Union Trust Building, Downtown, by the end of the month.
The group, which includes Michael Kamen, founder of the privately held company, and a business associate, Gerson Fox, also of Los Angeles, said it has plans to restore the grandeur of the block-long structure at 501 Grant St. that experts say is one of Pittsburgh’s most architecturally significant buildings.
The purchase price has not been disclosed, but the building is assessed at $30.75 million, according to Allegheny County records.
“We look at the Union Trust Building as a classic building that can’t be duplicated,” said Rick Barreca, CEO of Mika Realty, also one of the investors.
Plans are to continue using the 11-story, 800,000-square-foot structure as an office building and attract a mix of upscale retail tenants to the first level, he said.
“We think that is the highest and best use for it,” Barreca said. “We’re looking forward to bringing in some exciting retail to the first level, and leasing the office space to some very good tenants.”
The Union Trust Building, which has been known as Two Mellon Bank Center, has been nearly empty since Mellon Financial Corp. — now Bank of New York Mellon Corp. — moved its personnel out of the structure in May 2006. A small number of mostly retail tenants remain on the first level, the largest being Lorrimer’s clothing store.
“Several major office tenants and retail tenants already have expressed interest in the building,” said Jeffrey Ackerman, commercial real estate broker with CB Richard Ellis/Pittsburgh, the firm commissioned to sell the building by the owner, Teal Rock 501 Grant Street LP, a partnership owned by Philadelphia-based Cigna Corp.
CB Richard Ellis will handle leasing and management of the building once the sale is completed, Ackerman said.
The investment group is working with two architectural firms on ideas for the building that would not disturb its historic character, Barreca said.
Mika’s Internet site said it is the 13th-largest developer in the Los Angeles area, with some 5.9 million square feet in commercial real estate developed.
Barreca said Kamen has been involved in the commercial real estate business for more than 40 years and has specialized on “adaptive reuse” of older buildings, including conversion of office facilities to loft apartments.
One of Mika’s projects was the Star News Building, an 80,000-square-foot building in Pasadena, Calif., that was renovated as a $20 million residential building. The project included installation of a 24-hour fitness club and other amenities in a 30,000-square-foot basement that used to house newspaper printing presses.
A current project is Victory Lofts, where the company is developing 102 residential units in a Cleveland building in the vicinity of the Cleveland Clinic, Barreca said.
“We are really enthused that it appears a very promising buyer is very interested in the building,” said Arthur P. Ziegler, president of Pittsburgh History & Landmarks Foundation. He met Barreca recently when he was visiting the city.
“This is a developer who appears to have considerable experience with historic buildings and is particularly attracted to the Union Trust Building because of his positive feelings about the future of the Pittsburgh market and the extraordinary architectural quality of the building,” Ziegler said. “I think he is going to treat it very well.”
Barreca said the group is finalizing financing for the purchase with a bank, rather than go to the capital markets or Wall Street sources. Thus, he said, there should not be a problem with financing because of the mortgage crisis, which has played havoc with the national residential real estate market and impacted some commercial deals.
Securing financing was said to be a problem with the previous potential buyer, a New York investment group that included Houlihan-Parnes/iCap Realty Advisors of White Plains and J.J. Operating Corp. of New York City.
Ron DaParma can be reached at email@example.com or 412-320-7907.