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An artist's rendering of the American Commerce Center, which is expected to be built at 1800 Arch St.
Photo Courtesy:
www.philly.com
Posted on Thu, Sep. 25, 2008
Hill takes on Philadelphia skyscraper
By Maria Panaritis
Inquirer Staff Writer
A new developer took over plans yesterday to build one of the nation's tallest skyscrapers in the heart of downtown Philadelphia.
Hill International Inc., of Marlton, a fast-growing construction-management firm founded by Cherry Hill native Irvin Richter, said it had bought out Walnut Street Capital L.L.C.'s interest in the proposed $1 billion American Commerce Center at 1800 Arch St.
Terms were not disclosed.
Officials said the new development team, which includes one member of the Walnut Street group that hatched the skyscraper plan earlier this year, would release more details at an Oct. 21 appearance before the Philadelphia City Planning Commission.
Hill, which has done extensive work managing construction projects in the Middle East and North Africa, said it had formed a subsidiary - Hill International Real Estate Partners L.P. - to handle development of the 1,510-foot-tall skyscraper.
Hill president and chief operating officer David Richter becomes chief executive officer of the new entity, and Garrett Miller becomes president once he leaves Walnut Street Capital on Wednesday.
Miller, president of Walnut, will be in charge of luring tenants to the 2.2 million square feet of office space and hotel rooms on the drawing board.
The skyscraper, which has met opposition from community groups, requires city zoning approvals. Developers have not yet secured full cash commitments or loans needed for the sizable project. A Seattle pension fund has said it would provide some cash.
But securing tenants is critical to obtaining financing.
The subsidiary marks Hill's first official foray into the development business in the United States. Hill recently set up a similar partnership with an equity partner in Abu Dhabi, United Arab Emirates.
The partnership gives Hill exclusive rights to construction-management work on the skyscraper and gives it a cut of developer fees. The company went public in 2006.
Richter said Hill would put up no equity toward construction - a model similar to its Abu Dhabi partnership.
The new company would replicate deals like this across the Mid-Atlantic and the Northeast corridor to grow business, Richter said.
Under the Center City deal, Hill and Miller become equal partners, and Hill becomes exclusive project manager when construction begins.
"I think that this sort of relationship gives them a secure source of referral work for projects - as well as another way to capitalize on their expertise by gaining a greater share of the potential revenue associated with the project," said analyst Tim McHugh, who tracks the publicly traded company for William Blair & Co. L.L.C. in Chicago. McHugh's company has an investment-banking relationship with Hill.
Hill's buyout of Walnut Street Capital's stake includes that of Walnut chief executive officer Joseph Grasso, who did not return a call seeking comment.
The new partnership came about after Hill reached out to Grasso and Miller's company, Richter said. "We were talking to Walnut Street Capital and Garrett about doing project management on the building," he said.
Miller said he had met for months with city officials and downtown residents about the skyscraper, which would become the tallest in Philadelphia and one of the tallest in North America.
City Council legislation would be needed to clear the path for construction.
"We've engaged the neighborhood now for the better part of eight months, and now we are looking to present our final case," he said.
Contact staff writer Maria Panaritis at 215-854-2431 or
[email protected].
http://www.philly.com/philly/business/29734089.html
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what about those new renderings you mentioned?
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