According to this article in today's Philadelphia Inquirer, there is some Miami/Vegas style drama going down with yet another Philadelphia condo building. This time the financial distress involves the highly visible, newly constructed 10 Rittenhouse Square building that's still receiving finishing touches to its ground floor retail areas. Control of the building has been seized by a local pension fund that acted as a mezzanine lender on the project and is owed about $57 million by the building's developer. The senior lender on the project, IStar Financial, can also be expected to make a play for control of the building as it has become obvious that allow the developer to continue operating the building in 'business as usual' fashion is unlikely to get either lender paid-in-full.
So, what if you've been considering a luxury condo in Center City - does this move affect your shopping process? I say that it does - regardless of the legal and financial drama behind the scenes, 10 Rittenhouse is one of the best condo buildings in Center City with an unbeatable location, all the amenities of brand-new-construction, and now an owner with a little motivation to generate quick cash by selling units ASAP. If you've got cash or can qualify for a jumbo mortgage you should be able to negotiate a pretty sweet deal for a unit at 10 Rittenhouse where asking prices currently range from $575,000 to $15,000,000. Just make sure you do your homework up front to confirm the condo association's ability to survive a default situation - a lesson learned from the Miami's of the world. Also be prepared to go through a somewhat lengthy sales process given that the final decision-maker on the seller's side could change from day-to-day as the building's ownership situation changes.
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