Judge approves sale of UArts’ Terra Hall to Temple University for $18 million

A U.S. bankruptcy court judge has approved the sale of the former University of the Arts’ main academic building to Temple University for $18 million, according to a document posted Monday in the public docket.

Terra Hall at Broad and Walnut streets, just a few blocks from City Hall, is the second UArts building to complete the sales process through the court. Judge Brendan L. Shannon last month approved the sale of the Art Alliance building to the Curtis Institute of Music for $7.6 million. Bids are pending on two of the seven other buildings for sale.

Temple president John A. Fry has said that the university hopes to make Terra Hall ― the largest of the UArts buildings for sale ― its Center City campus. The university currently rents space for that campus at 1515 Market St. The lease for that property expires June 2027.

» READ MORE: Temple has made an $18 million bid on UArts’ largest building, one of nine for sale

“We’ve been able to acquire their anchor academic asset and that will allow us an opportunity to reposition it both with our Temple University Center City program, but also give us some really nice opportunities for growth and expansion,” Fry said in an interview Monday. “It’s an opportunity to really position Temple in the heart of Avenue of the Arts.”

He’s asked deans for ideas for programming they would be interested in offering at the site, he said.

The building needs work both in its foundation and elevators, and the university has set aside a reserve fund to make investments over the next five years, he said.

“We actually factored that into the price that we paid...,” he said. “We absolutely knew what we were getting into.”

With Macy’s in Center City closing and the Sixers deciding not to build a new arena on Chinatown’s southern edge, Fry said he hopes that Temple’s visible investment in Center City will be a “great shot in the arm” to the Avenue of the Arts.

“I feel like a bright spot in all that is Temple investing in Center City and doing so in a significant way and in a building that is really an important Philadelphia building,” he said.

Temple’s bid “represents the highest and best offer for the property,” according to the court document.

At 274,000 square feet, Terra Hall is more than twice the size of the next-largest building in the portfolio, Anderson Hall, which stands at 120,000 square feet. Chase Bank will remain a tenet in Terra Hall, which “will help us carry the building financially,” Fry said.

Temple accepted more than 380 UArts students after the school closed, more than any other institution. It also had tried to negotiate an acquisition of UArts, which ultimately failed because the Hamilton Family Charitable Trust, which said it had contributed about half of UArts’ endowment, was not in favor of that money going to Temple as part of the deal.

Meanwhile, a hearing is scheduled for 11 a.m. Wednesday in bankruptcy court on the fate of the Arts Bank building. Quadro Bay LLC, which wants to use the building for residential and possibly commercial purposes, was the highest bidder at $2.71 million.

» READ MORE: The sale to Curtis of UArts’ Art Alliance building gets court approval

But the Pennsylvania Attorney General, who is responsible for protecting charitable interests in bankruptcy sales, objected to the sale, arguing that Pennsylvania law requires that donor intent and the charitable purposes of the property be considered. The Lantern Theater Company, which bid $2.61 million, just $100,000 less, should be favored, given its intended use of the performance space more closely matches that of UArts, the attorney general argued.

Both Quadro Bay and the UArts bankruptcy trustee have argued in court filings that the sale to Quadro Bay should be permitted to secure fair market value for the building and help make creditors whole. The trustee also contended the building is not subject to any donor restriction.

» READ MORE: UArts buildings sale raises question about use

A bid also was registered last week for Spruce Hall, formerly a UArts residence hall. A company called 1228 Spruce LLC has bid $7 million. Jeffrey C. Hampton, a lawyer for Saul Ewing who represents the company, declined to comment last week on questions about 1228 Spruce LLC or its intended use for the building.

Bids have not yet appeared on the public docket for the five other buildings. UArts abruptly closed last June, leaving students and staff scrambling, and the school filed for bankruptcy in September. The attorney representing the UArts bankruptcy trustee has said in court that there is secured debt of approximately $67 million.

Fry said Temple is watching closely what happens with the sale of the other buildings, though it is not bidding on them.

“At the very least we have an interest in who our future neighbors are going to be,” Fry said. “What I’m hoping happens is that there is a really strong set of arts and creative type of work that happens.”