The art of constructing deals

Director of Real Estate Development Paul Sehnert

Position:
Director of Real Estate Development, Facilities and Real Estate Services Division

Length of Service:
3 years

Sidelight:
“ As a single father of two small boys, that’s really my life, taking care of those guys.”

When Paul Sehnert visits 40th and Walnut with his young sons, Ben (9) and Josh (12), they invariably comment on the “cool parking lot” next to the Fresh Grocer. Sehnert, 48, takes in the whole scene—the busy grocery store, the lines for tickets across the street at the Bridge, the “moving and grooving” along 40th Street—with a sense of personal satisfaction. That’s because he’s the man responsible for structuring Penn’s real estate deals and coordinating the University’s partnerships with outside developers.

Sehnert, an architect and M.I.T.-trained real estate developer, was brought in as a consultant by Penn in the 1990s to advise on the University Square project. Since coming on staff three years ago as Penn’s director of real estate development, he has been instrumental in such landscape-altering projects as the new Penn-Alexander School and WXPN/World Café’s future home, the Hajoca building.

Director of Real Estate Development Paul Sehnert

Director of Real Estate Development Paul Sehnert spends his days negotiating deals and structuring joint ventures for Penn with outside developers. A major player in the acquisition of the postal lands, Sehnert regularly dons his hard hat to check out progress on current construction projects, such as the translational research lab taking shape in a former industrial building across from his office in the lower level of the Left Bank building.

Penn’s recent acquisition of the postal lands—a 24-acre parcel between the campus and the Schuylkill—has been at the top of Sehnert’s to-do list since he arrived here. Another project close to his heart is the $55 million renovation of an industrial building at 121 S. 31st Street into biotech and translational research laboratories.

Q. Seems like we’ve been hearing about the postal lands for a while. How long has it been in the works?
A.
Penn has tried for 30 years to acquire this site. I have files that go back to the ’60s. One generation of real estate officers at the university after another had tried and tried, so I’m thrilled to be part of the team that got it over the goal line. We did it.

Q. What did you do different?
A.
Well, we had leadership commitment, clearly. Also the post office really needed to pull their industrial processing out into a new location. It was truly just a historic convergence of all of these things. It wasn’t just Penn’s plan, it was the whole city—public, private, Amtrak, Conrail, Drexel all of the various stakeholders—who went into a two-year strategic planning process. All the while it was a highly guarded secret because of the risk that the message could get mangled.

Q. What will happen to the land?
A.
We’re probably land banking it for a decade. Not much will happen.

Q. Why not?
A.
We’re going to require literally millions of dollars of public sector inducements, infrastructure improvements, bridge repair and open space improvement before the conditions are appropriate for real estate development. But it will happen. Is that a 50 year build out? Is it a 25 year plan? I guess that’s one of those imponderables.

Q. Sounds kind of vague.
A.
What we really did is we secured our expansion space for 50 years. Will the plan ultimately be built in the configuration we’ve shown? Who knows? All we can do is put today’s filter on it and say this is what we think is going to happen, but in any case owning the land is paramount. Now we control our future

Q. I know you’re excited about the translational research lab that’s taking shape behind the Hajoca building. Why is it such a big deal?
A.
It’s the first time a core academic need has been fulfilled as a development project—not using Penn’s money. We’ve built a movie theater and a bookstore and we’ve furthered the Agenda for Excellence and won an Urban Land Institute Award for Excellence. Those were wonderful things, but we’d never built a core academic need [with outside capital]. So this was a critical piece.

Q. So who is footing the bill?
A.
We’re leasing the land to a developer, who in turn raised the capital and is improving the property to our design. Then he’ll lease it back to us, which preserves our capital. It’s a way institutions can get third-party developers to provide commercial alternatives. I didn’t invent that model. Other universities are using it.

Q. What other big projects are you working on?
A.
34th and Chestnut is a big one right now. It’s a surface parking lot today. The University bought it in 1999 and we’re planning to turn it into market-rate housing, positioned more or less like the Left Bank with a retail frontage and restaurants. Right now it’s an ugly block, but it’s really a lovely site. You’ve got this newly renovated open space—our Rittenhouse Square—and our trophy law school across the way. We’ll get it done by hopefully the fall of ’06. It would have been inconceivable had the Left Bank not proved the value of market-rate housing in this neighborhood.

Q. I’m curious. You’re a trained architect. Why did you make the switch to real estate development?
A. My thinking was that the more you get into the deal side of planning the more effect you might have on the built environment. Classic naive thinking, but in some ways it’s true. You’re further into the front end of things when you’re involved in real estate planning. As a designer I felt I was just doing the window dressing. Now I’m doing exactly what I set out to do. I couldn’t be more thrilled because I really am at that point where economics and design and city planning all come together.

Originally published on June 10, 2004