Transparency lacking in sale of Westinghouse's Cranberry campus
Cranberry Township and Seneca Valley School District officials are seeking transparency on the recent $180 million sale of the Westinghouse complex in the township and rightfully so.
The buyer of the 823,000-square-foot property is Fortress Credit Advisors, a subsidiary of the Fortress Investment Group of New York. The property’s previous owner, Columbia Property Trust, did not announce the buyer’s identity at the time of the sale.
In 2017, Columbia secured a 15-year renewal with Westinghouse to continue its lease for the full complex as its world headquarters.
As a result of various maneuvers to complete the transfer, including creating subsidiaries of both Fortress and Columbia to facilitate the sale, taxes were paid on $145.5 million, or $34.5 million less than the announced sale price. Because of that, the school district and township might have missed out on nearly $173,000 each in real estate tax.
Earlier this month, Cranberry Township Manager Jerry Andree and Seneca Valley School District Superintendent Tracy Vitale sent a letter to Columbia seeking a “detailed breakout” of the transaction and contact information for the new buyer.
One of the key points mentioned in the letter is that both Cranberry and Seneca Valley are responsible for certifying the property owner has complied with tax law and local ordinances. This is because the property is real estate-tax-exempt.
This is why they are seeking details of the deal.
Andree called the letter part of an “ongoing saga to bring transparency.”
Fortress has not reached out to the township concerning the sale.
The Westinghouse campus sale is one of many statewide in which companies have created multiple subsidiaries to facilitate a commercial real estate transaction, rather than directly sell the property.
A buyer and seller can transfer an 89 percent interest of a partnership or business entity that owns real estate at the day of a closing and then transfer the remaining 11 percent of the partnership interest three years and a day later and forgo paying any of the tax.
By doing this, a company can avoided paying full deed transfer taxes. Even though everyone might not agree, it’s a smart business move. But township and school officials should have been kept in the loop.
Andree knows there are methods used by companies to reduce the amount of taxes paid in a major real estate transaction and did not imply any were used in the Westinghouse sale.
He just wants to know how it was done.
So do we.
