Union Trust sale a done deal
By Ron DaParma
Thursday, February 7, 2008
The sale of the historic Union Trust Building, Downtown, was completed Wednesday to principals of Mika Realty Group of Los Angeles.
Purchase price for the ornate, 11-story building that covers a full block of Grant Street, was $24.1 million, according to documents filed with the Allegheny County Recorder of Deeds office.
The purchase was expected to be completed last week. It was delayed because of the complicated nature of the transaction, said Jeffery Ackerman, commercial real estate broker with CB Richard Ellis/Pittsburgh, who negotiated the deal.
The new owners intend to restore the grandeur of the building that was designed in Flemish Gothic style by noted Pittsburgh architect F.J. Osterling and built in 1916 for industrialist Henry Clay Frick. The buyers were not available for comment yesterday.
The group, which includes Michael Kamen, founder of privately held Mika, and a business associate, Gerson Fox, also of Los Angeles, plans to continue using the structure as an office building and to attract a mix of upscale retail tenants to the first level.
The sale price was about $6 million below its $30.75 million market value, including land, as listed in public records. But local real estate experts said it was not a bargain-basement deal, noting that the building is nearly empty with the exception of a few retail tenants on the first floor.
“It’s a beautiful building with a lot of character,” said Jim Geiger, senior vice president with Grant Street Associates-Cushman & Wakefield, a Downtown commercial real estate firm. “It has a lot of things going for it, but it will be a challenge to fill the office space in light of today’s office market.”
Seller of the building at 501 Grant St. was Teal Rock 501 Grant Street LP, a unit of Cigna Corp. of Philadelphia.
Cigna has controlled the property since 2006, when it assumed ownership from long-time owner, Florida-based DeBartolo Property Group LLC, which defaulted on a mortgage held by Cigna.
The building ran into trouble after Mellon Financial Corp., its major tenant, relocated employees to other buildings Downtown in May 2006, and most other tenants followed suit due to uncertainties with their leases.
For the buyer, the purchase price, which works out to about $40.50 per square foot based on the 595,000-square-feet of leasable space in the building, is lower than it would cost to try to duplicate such a grand structure in the city, said Ned Doran, of GVA Oxford, the commercial leasing arm of Oxford Development Co.
Questions to be determined are how much they will spend to upgrade the building and their ability to attract tenants, Doran said.
Ackerman has said a number of large office users and retail prospects already have looked at the building.
The purchase was welcomed by Tom Michael, who owns upscale Larrimor’s clothing store in the building, the largest remaining retail tenant. Michael said he had talked to Michael Kamen of Mika recently.
“We are optimistic about moving forward and filling the building with quality tenants,” said Michael. “They have a large plan in the works for the building.”
Ron DaParma can be reached at email@example.com or 412-320-7907