MCB Real Estate acquires mortgage note for downtown tower

MCB Real Estate shelled out $25 million for the mortgage note on a 10-story office and retail development at Pratt and Light streets, according to three sources familiar with the transaction that is not recorded in state property records.

The tower last sold in March 2018 to a subsidiary of Banyan Street Capital for $80.1 million, records show. The transaction was $55.1 million less than it last traded for, marking the second office tower in Baltimore's central business district to change hands this summer at a steep discount as the troubled local office market resets.

P. David Bramble, co-founder of MCB, said in an email last week that "we can't comment on One East Pratt at this time."

Lorri Dunne, chief operating officer of Miami-based Banyan Street Capital, and Zac Gruber, principal of the firm's office division, were unavailable to comment. Adam Dominick, an associate at Banyan, declined to comment on Tuesday morning, saying, "I am no longer involved in 1 E. Pratt St."

The sale of the building comes about a year after Banyan Street Capital sought to sell its $54.3 million outstanding loan on the property via Newmark brokers, the Baltimore Business Journal reported in July 2022. Just weeks after that report, the tower's parking garage partially collapsed, crushing several cars in the 231-space structure that today is still under repair.

Newmark officials were unavailable to comment Tuesday on the quest to sell the outstanding loan last year.

The transaction is the second bargain deal downtown this summer.

One South Street was acquired on June 16 by BHN Associates for $24 million — nearly $43 million less than it last sold for in 2015. The new owners, a New York investment firm, bought the tower in a short sale, which indicates the amount paid was less than the outstanding mortgage.

The One South Street and 1 E. Pratt St. deals are part of a national trend rocking the office and commercial markets this year as the pandemic subsides and corporate leaders readjust in-office work mandates for employees. Most are downsizing, and Baltimore's vacancy rate downtown is at 21% with the sublease market also saturated with available space.

Tenants in the 1 E. Pratt St. tower include PNC Bank, Cushman & Wakefield, Gensler and Tydings & Rosenberg LLP. The building was 80% leased as of last summer.

The 355,800-square-foot tower is located at one of the city's busiest intersections. It is marked by a large green wall that faces Pratt Street with a bevy of natural plants that spell out the logo of anchor PNC Financial Services. The building also has a deck facing Pratt Street as an outdoor amenity for workers, a revamped, modern lobby and a gym. Kona Grill has a restaurant at street level, and space that once held Sullivan's Steakhouse remains vacant.

Banyan Street Capital pumped $3 million into the tower beginning in 2018 to upgrade its amenity spaces and other areas. The property is still listed in the online portfolio of Banyan Street's website among its other trophy office towers in Atlanta; Jacksonville, Florida; Rockville and Tysons Corner, Virginia, to name a few areas. The firm owns a total of 12 million square feet, its website says.

MCB's acquisition of 1 E. Pratt increases its footprint in the Inner Harbor area. The Baltimore firm has a total of 14 million square feet of industrial, office, retail, mixed-use and multi-family properties in several states and nearly 4 million square feet under development.

MCB closed last month on its high-profile acquisition of Harborplace out of receivership. Plans to reimagine and redevelop the once-iconic, now nearly vacant downtown complex are underway with an expected reopening in 2025, Bramble said at a community forum in June. The firm's expansive local portfolio includes The Rotunda in North Baltimore, Northwood Commons, Yard 56, The Fitzgerald apartments and Madison Park North on North Avenue, where a $100 million overhaul is underway. The site has been rebranded Reservoir Square.