Centre City Office Tower 1650 Arch Faces Foreclosure

A 27-story office tower in the Philadelphia neighborhood Center City is heading to a foreclosure auction as distress continues to trickle through the city’s main office corridor.

The auction is scheduled for September 29 at 60 Centre Street in Manhattan, according to an auction notice reviewed by The Real Deal.

Acore Capital initiated the non-judicial foreclosure on ASI Management’s tower at 1650 Arch Street.

The non-judicial foreclosure accelerates the lender’s attempts to seize control of the 553,000-square-foot, half-empty Class B office tower.

Acore, acting as an agent for Delphi Financial, filed a lawsuit to foreclose on the property in June. The lawsuit alleged ASI defaulted and owed $46.9 million on a $75.8 million loan issued in 2018, the Philadelphia Business Journal reported. In July, a receiver was appointed by the court to oversee the property, whose occupancy had fallen from over 90 percent to 52 percent.

Now, Delphi is also foreclosing on the mezzanine loan through a non-judicial process known as a Uniform Commercial Code foreclosure. Under a UCC, Delphi is foreclosing on ASI’s equity interests, instead of the property itself. A UCC allows lenders to foreclose in a few months as opposed to the years a judicial foreclosure can take.

Matthew Mannion of Mannion Auctions is the auctioneer. Carl Neilson of Colliers is the broker handling the sale.

Alex Schwartz’s ASI bought the office tower in 2018 for $78.6 million. It was 93 percent occupied at the time of the purchase, according to the Philadelphia Business Journal.

ASI did not return a request to comment.

Center City’s office vacancy hovered around 20 percent in its most recent quarter, according to a JLL report.

Another sign of distress: CBRE is marketing 1500 Market Street, a 2.2-million-square-foot office complex formerly owned by Elie Schwartz’s Nightingale Properties, as a residential conversion, according to Bisnow. The sale of the property is expected to generate around $100 million, an 80 percent drop in its appraised value from five years ago.