CAMDEN, NJ—Liberty Property Trust announced Tuesday that it recorded a $26 million write-down of its development project along the Camden waterfront.
In a conference call announcing its second quarter 2018 results, Liberty Property Trust CEO Bill Hankowsky told investors “though we've created a very exciting place with a great deal of potential, what has changed, however, is timing.”
According to Hankowsky, the build out of the project is taking longer than the company anticipated because of some potential projects backing out and the murky future of the state’s tax credit programs, which are expected to have previously lured companies like American Water, Connor Strong & Buckelew, The Michaels Organization and NFI Inc.
“Given the tax credits available to users at the site are scheduled to sunset mid next year, as well as other factors,” said Hankowsky, the company needed to write down the $80 million project by almost a third of its investment.
Last week, a study on those tax incentive programs by the Rutgers University Bloustein School of Planning and Public Policy recommended that the state take another look at how those incentives are awarded. Gov. Phil Murphy also signed an executive order in January calling for the Office of the State Comptroller to carry out a complete audit of the tax incentive programs, expected to be completed later this year.
In 2016, Liberty Property Trust began construction of an $80 million mixed-use development project along approximately 20 acres of the Camden waterfront with 1.1 million square feet of development capacity.
Currently, the headquarters for American Water and a 18-story tower encompassing the offices of Connor Strong & Buckelew, The Michaels Organization and NFI Inc. are under construction as part that of development. Also slated for construction is an apartment building from the Michaels Organization and a 180-room Hilton Garden Inn Hotel.
So far, the company has recouped on over half of its $80 million investment, officials said, leaving a remaining $38 million. With the $26 million write down, that leaves $12 million for the company to recover. And while Liberty Property Trust may lose money on the project, it believes it can recover that $12 million through the development of the project's remaining 500,000 square-feet of future office space on four land parcels.
However, Liberty Property Trust still expects to recover its full investment, and according to a press release is currently working with a number of companies interested in locating to the Camden waterfront.
“We undertook the Camden project three years ago, it represented an exciting opportunity to create a dynamic new mixed use environment and that is still the case,” said Hankowski on the conference call Tuesday.
“We had a very solid business plan going in ... it just sort of basically hasn't played itself up the way we had anticipated,” Hankowski said.