North Broad Street’s newest hotel is unexpectedly $23M short to build it

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For the past 50 years, the Beury Building on North Broad Street has sat vacant. And the community must continue to wait for any economic development there — late last year, a key lender that promised a developer a loan pulled out unexpectedly.

The historic property was once known as the National Bank of North Philadelphia, which sits near the commercial intersection of Broad Street, Germantown and Erie avenues, but for decades it’s been a shell of a building covered in graffiti. About 12 years ago, the property was acquired by Shift Capital, a mission-based developer with big plans to breathe new life into it.

“By having all these vacant properties sitting in such a prominent intersection it’s making it really difficult for any economic development,” said Nancy Gephart, principal with Shift Capital.

Shift Capital leaders knew it was a risky proposition, which is why the $70 million renovation into a hotel qualified for historic preservation and new market tax credits, as well as a $2 million grant from the Pennsylvania Redevelopment Assistance Capital Program. The property-assessed clean energy model known as C-PACE and Shift Capital put equity into the project, too. About four years ago, the developer secured all the financing it needed to make the 172-room Marriott hotel a reality, including having a local hotel operator, The Wankawala Organization, as a partner. Marriott as a chain even donated $2.5 million.

Then the COVID-19 pandemic began and the entire deal fell through. A few years later, the developer put together a financing package again and began construction, completing about $6 million of environmental remediation and stabilization of the Beury Building. Yet still, a lender that promised a $23 million loan pulled out unexpectedly, which Gephart said unraveled the entire project. That means Shift Capital won’t be able to keep its promises to the community quite yet — it signed a community benefits agreement that would have employed local residents and ensured contracting with minority-owned businesses for two projects.

“The community groups are really excited about the project,” Gephart said, adding that the situation “just forced us to put a pin in it. We’re not walking away from this project by any means.”

Shift Capital is confident that there’s a market for a hotel on North Broad Street and that it will find a new lender.

“There are actually 11 hospitals and universities within three miles of the site that are currently not being served by hospitality,” Gephart said.

The building can be seen from Temple Hospital just a few blocks away, where its medical school sits. And it’s near La Salle University and Einstein Hospital, she said.

Shift Capital is also planning an affordable residential project next to the hotel known as The Residences at Beury. That project would cost an additional $43 million to build, and the developer hasn’t broken ground on that yet.

The goal was to build the hotel and residential project at the same time even though the financing was put together separately.

“We knew that for both of them they were going to be subject to funds available when they were available,” she said. “We still believe in the project. If someone came to us and said, ‘Hey, we want to give you $23 million of debt,’ we would take it and run with it as fast as we can [to build the project].”

The developer owns the former bank across the street from the 14-story Art Deco tower but doesn’t have immediate plans for that redevelopment project.

Shift Capital also has plans to invest in a mixed-use development near North Broad Street and Lehigh Avenue as a transit-oriented project steps away from the Broad Street Line, the Amtrak North Philadelphia Station and the Regional Rail stop for North Philadelphia.

Shift Capital has already completed several projects in Kensington, serving as a track record for what’s possible with adaptive reuse in Philadelphia. And they’re hopeful that the three projects planned for North Philly will pan out someday.

For now, Shift Capital is confident that the Beury Hotel is in a good position and “really just needs to be built out” if the developer can secure a new loan.