PREIT sells White Clay Point to JPMorgan Chase for $11 million
● By Richard Gaw
There it was, included as part of Pennsylvania Real Estate Investment Trust's (PREIT) reported first quarter results in a release dated May 2:
“In April 2019, we [PREIT] sold an undeveloped land parcel located in New Garden Township, Pennsylvania, for a total consideration of $11.0 million, consisting of $8.25 million cash and $2.75 million in preferred stock.”
In an email from a PREIT representative to the Chester County Press last week, it was confirmed that the sale is complete, and that the buyer of the property is JPMorgan Chase, a global financial services firm that has assets of $2.6 trillion and global operations.
Filed under “Asset Dispositions,” the sale of White Clay Point was listed along with news of two other sales the company recently negotiated: the $5 million sale of a portion of undeveloped land in Gainesville, Fla. in March; and the sale of PREIT’s Whole Foods parcel in the Exton Square Mall for $22.1 million, which was finalized in April.
These transactions are in keeping with PREIT’s recent business plan, which calls for unloading under-performing mall complexes from its investment portfolio. In 2016, PREIT sold four malls in Pennsylvania, Virginia and Alabama for more than $93 million, that included the Lycoming Mall in Pennsdale, Pa. for $26.35 million, and the sale of three other malls for $66 million that included Gasden Mall and Wiregrass Commons Mall in Alabama, and New River Valley Mall in Virginia.
On the other side of the transaction, JPMorgan Chase's 187-acre purchase in New Garden generously dovetails with a Sept. 24, 2018 company release that announced the firm's intention to expand its network to Philadelphia and the Delaware Valley.
Over the next five years, the release stated, JPMorgan Chase intends to open approximately 50 new branches and hire 300 new employees in the Delaware Valley region, giving local customers access to its banking services while creating local job opportunities for residents. Currently, the firm has nearly 5,100 branches in 23 states and plans to open 400 new branches and hire as many as 3,000 employees in new markets in the next five years.
“The Delaware Valley is an incredibly important market for us,” said Jamie Dimon, JPMorgan Chase chairman and CEO. “We already have thousands of employees here that serve our customers every day. This will create even more well-paying jobs with healthcare and retirement plans for people in the area, and better serve our existing and new customers.”
This expansion will add to the firm’s current base of more than one million consumers and over 30,000 business clients in Philadelphia and the Delaware Valley region. The bank has been doing business in the region for nearly 20 years with more than 11,000 current employees, including its major credit card hub in Wilmington, Delaware.
As part of its commitment to workforce development in the local community, the firm also announced the formation of Spectrum Scholars, a college-to-careers program for students with autism who want to study computer science or electrical and computer engineering. In partnership with the University of Delaware, the program will provide free academic coaching and job-boosting opportunities as well as other support throughout college. JPMorgan Chase will offer on-the-job training through internships at the firm, with potential for participants to be hired into full-time positions.
While these indicators strongly support the creation of bank operations at the site, a recent township visit by a subcontractor of JPMorgan Chase revealed an entirely different conceptual plan. A township official told the Chester County Press that the representative made a one-time visit to the township, where he proposed a conceptual, preliminary sketch idea on paper that called for a mixed-use development that would be divided into over-55 residences and single-family housing, and between 150,000 and 200,000 square feet that would be devoted to commercial space.
No formal presentations of the plan to the township have been made.
“The initial thing I saw about the plans were that they would take up far less impervious coverage than the PREIT plan,” said Steve Allaband, chairman of the township’s Board of Supervisors, who was at the meeting. “At one time, PREIT was looking to develop one million square feet, and this proposal would develop about 800,000 square feet less space.”
Allaband saw two additional positives in the preliminary plan.
“The site sits at the headwaters of a waterway that runs through St. Anthony’s, through Somerset Lake and ultimately to the White Clay Creek, and the proposed plan would, if implemented, have far less of an environmental impact on water quality,” he said. “Given its design and commercial concepts, it would have less of a regional draw and more of a community one, which would have less of an impact on traffic along Route 41.”
As the abandoned property at the southern-most entrance to New Garden Township awaits its future, the sale of White Clay Point effectively brings a long, fiery and litigious tussle between PREIT, the township and its residents to an end.
When it was originally pitched by PREIT representatives to the township more than 15 years ago, White Clay Point was designed to be a 187-acre mixed-use project that would provide for 84 acres of retail space, 52 acres devoted to a town center, and 51 acres dedicated to the construction of 83 single detached units that were planned to be built adjacent to the Hartefeld development and golf course, near Sharp Road. Potential tenants that were mentioned throughout its many hearings before the township were Kohls, Walmart and Sam’s Club; in addition, a convenience store and gas station were planned for the other side of Route 41. The project also called for road improvements to Sunny Dell Road, Sharp Road, Sheehan Road and the widening of Route 41, as well as some improvements on Route 7.
To its supporters, the development promised to stimulate the township's tax base and bring jobs. To its detractors, the presence of a mega mall, they said, would permanently destroy the rural character of New Garden Township, attract a seedy element to its stores and potentially decrease home values.
After the initial conditional-use hearing in 2007, the supervisors approved the plan with over 90 conditions placed on it. PREIT then filed an appeal in the Chester County Court of Common Pleas, and negotiated a new conceptual plan with the township that was considered as a settlement to the lawsuit.
In Nov. 2011, following a three-and-a-half-hour deliberation when impassioned citizens pleaded with its leaders to not give in to the wishes of a big-time developer, the supervisors voted 3-2 in favor of granting PREIT a waiver request to convert the property from a subdivision into a condominium form of ownership that, according to PREIT, would provide flexibility in attracting potential tenants to the site, as well as stimulate the resale of the overall development.
Over the next several months, the township spent $17,000 in township funds to defend itself against two appeals by a grassroots group of 16 township residents who opposed the supervisors' decision to grant PREIT a waiver request to permit a condominium form of ownership at White Clay Point. The appeals were filed on Dec. 12, 2011 and Jan. 3, 2012, and received oral arguments in a West Chester courtroom on April 13, 2012, before The Hon. David F. Bortner.
Entitled "Daniel M. Linderman, et al., appellants v. the Board of Supervisors of New Garden Township, Appellee," the two appeals stated that the appellant believed that PREIT's request for a waiver of subdivision failed to comply with the terms of Section 6(A) of the Settlement Agreement between the board and PREIT, reached on Sept. 10, 2007, and further, that the grant of the waiver constituted “an error of law.”
The group, known as Friends of New Garden, won its first appeal in the Chester County Court of Common Pleas in Jan. 2012. A year later, PREIT filed another request to overturn the original ruling, arguing that Friends of New Garden did not have the proper standing to challenge the Board's approval, “because they have no direct, immediate or substantial interest” in the type of ownership White Clay Point would have. Further, PREIT stated that Friends of New Garden lack “procedural standing” to enforce the settlement agreement, because they are not linked to the settlement agreement, nor challenged it at any time.
On Jan. 3, 2014, PREIT's request to overturn the ruling was again denied. Judge Dan Pellegrini disputed PREIT's claim, and wrote in his argument that nearby property owners have a direct and substantial interest in the development. “Development near one's property will almost certainly bear some sort of effect on that property, whether from decreased property values, noise, pollution, traffic or a number of other factors,” Judge Pellegrini wrote. “...There is a casual nexus between the development and the effect of the Neighboring Property Owners' right to enjoy their properties.”
“I'm not really surprised it sold,” said Dan Linderman, a resident of the Somerset Lake development in the township, who is a member of Friends of New Garden. “I figured that PREIT would be getting out of the property, and at some point I thought that eventually, somebody would buy it if the township didn’t buy it first.
“I don’t know if it’s the end of a chapter, because we have to see what's going to happen, in order to determine whether or not the Friends of New Garden are going to have to come back together,” Linderman added. “I have confidence in how the township has evolved since [the time of the appeals filed against the township], in that whatever process that happens will follow the rule of law more accurately.”
Linderman, who is also a member of the Chester County-based Safety, Agriculture, Villages & Environment (S.A.V.E.), believed that the best course of planning for the future of the property will happen in the form of cooperation between residents, the township and the property owner.
“It can’t be all developers and all municipalities,” he said. “In order to get the best of both worlds, there has to be collaboration. Municipalities can reach out to developers, but to have the most success, developers need to work with residents to create ideas that yield the most success.”
To contact Staff Writer Richard L. Gaw, email email@example.com.