Dive Brief:

• The $33 million loan for the 151-unit Brush Factory Lofts in Philadelphia was transferred to special servicing in August for payment default, according to a report that Trepp shared with Multifamily Dive earlier this month. 
• The Rufo Cos. purchased the South Philadelphia building, once home to a paintbrush factory, from Sherwin-Williams in 2017, according to Philadelphia Magazine. The Rufo Cos., which did not respond to a request for comment, still owns the building, according to Yardi Matrix.
• CWCapital Asset Management is the special servicer, according to Yardi Matrix. The loan is not scheduled to mature until November 2031. The property was appraised at $48.6 million at securitization in 2021.

Dive Insight:

In 2004, Sherwin Williams bought the building, constructed in 1920, for paint production. 

“They thought they were going to make paint here, and that fell through,” Anthony Rufo Jr. of The Rufo Cos. told Philadelphia Magazine in 2020. “So when we were working with Sherwin-Williams, they approached my father and me to see if we wanted to purchase a building.”

In 2015, The Rufo Cos. initiated an ambitious redevelopment project, according to Philadelphia Magazine. The first phase saw tenants arrive in 2019, and the second phase was completed in 2020. 

Amenities at the property include a green rooftop deck, media room, fitness center and car-charging stations, according to the property’s website. In-unit features include washers and dryers, quartz countertops, hardwood floors and motion-controlled lighting.

Rents at the property were $1,910 in 2020 before rising to $2,087 in 2021, according to Yardi Matrix. Then they fell sharply, declining to $1,508 in 2022 and $1,500 in 2023.

The status of the Brush Factory Lofts’ loan switched to more than 90 days delinquent in September from 60 days in August. In the first six months of 2024, the loan had a debt service coverage ratio of 1.70x, as the building’s occupancy sat at 92%.

The southwestern Philadelphia submarket, where the Brush Factory Lofts sits, faces challenges. It is the only neighborhood in Philadelphia where landlords are cutting rents, though some other areas are seeing 0% rent change, according to information RealPage shared with Multifamily Dive.

Supply in the neighborhood is relatively high but not at the same levels as City Center and northeast Philadelphia, according to RealPage. It is, however, higher than Bucks County or Lower Camden County in Pennsylvania.

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