Visitors to Monk’s, the venerable Belgian beer bar in Center City, may have noticed that the beautiful Beaux Arts-style apartment tower across the street has seen better days.
While it’s unusual for a building near Rittenhouse Square — one of Philadelphia’s most upscale neighborhoods — to remain vacant, the tower at 16th and Spruce, formerly known as Sprucemont, has sat empty for years.
Graffiti marks creep up the sides of the 17-story building, as well as the glass Missing from many windows. A debris chute installed on the side of the building for demolition work does nothing, as if the construction crews had disappeared midway through their work.
This is basically what happened. A multi-million-dollar redevelopment project has gone bankrupt, and the building was recently placed into court-appointed receivership, records show.
According to court filings, Citizens Bank loaned a company called USRE 257 LLC — whose records are linked to real estate investors David Daniel and David Schreiber — millions of dollars to rehabilitate the apartment building. The company declared bankruptcy earlier this year, leaving the 107-year-old tower to rot.
Earlier this month, the developers officially lost control of the building. A Philadelphia Court of Common Pleas judge granted a request from the bank to place the building under third-party control to stabilize it while financial matters are settled in court.
“We’re not associated with that building anymore,” Daniel, a Bala Cynwyd-based property investor, said over the phone before hanging up the call.
Citizens Bank representatives declined to comment.
Daniel, who goes by “Dovid,” lists his background in developing and managing multifamily and industrial properties, according to a profile at Brixall, a real estate investment firm where he is listed as a principal.
“It combines a free market, libertarian approach and scientific rigor to make data-driven decisions and create strategic partnerships across borders and categories,” the website says.
USRE 257 acquired Sprucemont for more than $11 million in 2019 with plans to rehabilitate the historically approved building into 61 rental units, a slight reduction from the previous condo layout to allow for some larger, more luxurious homes. In November 2020, the company obtained a $14 million loan from Citizens Bank for the project.
the What was intended to be mainly a cosmetic renovation quickly became a more expensive undertaking as it became clear that building systems such as heating and plumbing needed a serious upgrade, said the project’s architect, Stuart Rosenberg.
“This happens to a lot of developers,” Rosenberg said. “They bite off more than they can chew, reducing the difficulty, complexity and cost of renovating older buildings.”
Construction came to an abrupt halt in 2022, and the bank USRE sent 257 notices of default in May of this year. In September, lawyers for Citizens Bank filed suit against the company in Philadelphia courts, seeking to collect about $12 million in debts and fees.
USRE 257 filed for Chapter 11 bankruptcy less than two weeks later.
Court filings from the bank also allege that the developers stopped paying construction companies associated with the project. At least six contractors have filed legal claims against the company since early 2022.
“Construction activity on the mortgaged property has ceased, and the borrower appears to have abandoned it, leaving it unsecured and creating a danger to the public,” according to the Citizens Bank complaint.
The neighbors bear the burden
For those who live nearby, the vacant tower quickly became an eyesore and a safety concern.
Neighbors said they initially noticed that the portable toilet used by construction contractors was not being cleaned. Graffiti began appearing on the building’s exterior, and surveillance camera footage from a neighbor’s alley showed people breaking into the building at night.
“It’s unnerving when you live with your family next to a building where, at all hours of the night, people are just breaking into it to no avail,” said Shawn Handler, who lives next door and installed a gate across the alley. At his own expense.
The property continues to rack up violations from the city’s Department of Licensing and Inspections. There have been eight failed inspections this year.
The Citizens Bank is demanding that the building be sold to recover some of its dues. The bank sought an emergency petition to place the building into court-appointed receivership to stabilize the building, citing damage to the structure — and the bank’s investments — and noting that USRE representatives had stopped responding to emails or voicemails.
On November 8, a judge issued a receivership order, giving SREA Property Management LLC effective control of the building. According to legal filings, the receivership will allow a new entity to make repairs “desirable for the successful marketing, management and sale” of the building.
Architect Rosenberg confirms that the tower itself is structurally sound.
“This building is very strong; it’s not going anywhere,” Rosenberg said. “It’s not the structure. “It’s just the building systems.”
There are interested buyers, such as Gautham Reddy of New Jersey-based Genesis Capital. But an increasingly difficult financing environment amid historically rapid increases in interest rates has made it difficult to move forward.
“We’re trying to get ownership of it, but it’s a complicated deal,” Reddy said.
Meanwhile, the neighbors are stuck in an eyesore.
For Handler, who moved in next door with his family in 2022, the vacant tower was a disaster — though it didn’t dampen his family’s enthusiasm for downtown living.
“We love living in the city, and we hope a great owner will have it and turn it into the gem it deserves to be,” Handler said.