The Heinz Lofts on the city’s North Shore.
The Heinz Lofts, an historic conversion on the North Side that helped to spur the wave of multifamily development happening now in the city, has a new owner.
An affiliate of Philadelphia-based Alterra Property Group LLC has bought the Heinz Lofts from an affiliate of Washington, D.C.-based Federal Capital Partners, according to Allegheny County real estate transaction records. Deed transfer documents dated April 21 indicate the buildings were sold for $25.1 million.
The sale comes after Cleveland-based The Ferchill Group, which converted the collection of 19th century manufacturing buildings into a 267-unit apartment complex more than a decade ago, sold off its interest in the Heinz Lofts in recent years to Federal Capital Partners as it sought to expand the Heinz apartment redevelopment of buildings into the remaining Heinz Service building that recently opened as the 155-apartment 950 North Shore.
As he and his partners work to lease up the historic renovation, John Ferchill, principal of The Ferchill Group, confirmed his company no longer retains any ownership of the Heinz Lofts. He recalls the early challenges of redeveloping the former Heinz manufacturing plant into a multifamily project in a Pittsburgh that was financially struggling when it opened in 2004.
“We were way ahead of the curve,” Ferchill said. “They were telling me I was in the hinterlands when I was trying to do that.”
Representatives of Federal Capital Partners and Alterra could not be reached for comment.
Alterra’s website revealed that its portfolio consists of historic mixed-use redevelopments and apartment conversions in Philadelphia, including projects called Textile Lofts and Shirt Corner, drawing on their previous industries in a similar fashion.
Alterra describes itself as a diversified real estate firm working in investment, development and management that pursues a variety of different property types, touting $1 billion in real estate transactions by the firm and its predecessors.
It’s unclear if the $25.1 million deed sales record, which translates to $94,163 per unit, reflects the full transaction value of the Heinz Lofts, given it’s long been well occupied at market rates and originally cost in the range of $70 million to build, with a variety of loans.
The project’s original financing included a variety of different funding sources, including historic tax credits and a $35 million federally insured loan, along with traditional bank lending.
Ferchill said that Federal Capital opted to exercise an option to buy out the original redevelopment and not proceed with what is 950 North Shore, adding “at the 11th hour they decided they didn’t want to go in with us,” leading Ferchill Group and MCM Co. — owned by Ferchill’s daughter Melissa — to pursue the project themselves.
Tom Murphy, now a senior fellow at the Urban Land Institute and the past mayor of Pittsburgh at the time the Heinz Lofts were developed, recalled the big decisions taken at the time to covert the property.
At risk were 1,200 jobs by the then H.J. Heinz Co., which had decided that the collection of 19th century manufacturing buildings were no longer functional with its contemporary needs, recalled Murphy.
He added the Heinz Lofts predate the Cork Factory Lofts in the Strip District and was one of the city’s first big apartment redevelopments at a time very different from today, when major multifamily projects are in the works all around town.
“I think once he got the buildings done, it filled up pretty quickly,” Murphy said. “We were all surprised at how quickly it filled.”
Now, however, the Heinz Lofts, whose website notes its proximity to the Strip District, faces fresh competition along the opposing bank of the Allegheny River, where residents of the complex with riverfront views can watch construction on a major new apartment building at the Riverfront Landing project. Further up river, the 300-unit Yards at 3 Crossings is well leased, and the Foundry at 41st Street is on the brink of opening in Lawrenceville, among others.
“Now, it looks pretty easy,” said Murphy of apartment development now versus when Ferchill developed the Heinz Lofts. “But he was taking a big risk at the time.”