Why should Delaware care?
For years, Delaware officials have viewed Wilmington’s downtown as an economic engine, and bellwether, for the state. But weighing on the area have been largely empty buildings that are part of the Bracebridge complex. Last year, state and Wilmington officials committed nearly $25 million in taxpayer-funded incentives to support Incyte’s move into those buildings .
Less than two years after investing nearly $80 million into two downtown Wilmington office buildings, the pharmaceutical company Incyte sold the properties to the city’s most prominent developer in a deal that generated just 10 cents in real estate taxes, according to public deed records.
The tax payment suggests a sale price of $1 for each of the Bracebridge buildings that sit next to Rodney Square and once formed the backbone of Delaware’s credit card industry.
That sale price also raises the question of whether the companies involved in the transaction earlier this spring avoided what might have been millions of dollars in taxes to Delaware and its largest city.
Delaware imposes a tax on real estate transactions that amounts to 4% of a sale price, or the fair market value of the property — whichever is higher. The revenue is then split between state and local governments.
Last year, Incyte held a book value for the two downtown Wilmington properties of at least $76 million, according to a company earnings report. While a book value does not necessarily reflect what a buyer would pay in an open market, it does offer a benchmark that is difficult to reconcile with a transaction that generated only 10 cents in taxes.
By writing off the value of the buildings as a business loss, Incyte will likely be able to reduce its future taxable income. But it won’t have the tens of millions of dollars in the bank that a sale might have produced.
Beyond the tax question, Incyte’s sale of the two buildings marks the end of the company’s ambitious project – backed by nearly $25 million in taxpayer grants – to renovate the buildings for what would have been a massive expansion into Wilmington’s city limits.
Instead, the drug company now plans a scaled-back move into the city, by leasing a portion of the buildings from their new owner, the Buccini/Pollin Group.
Incyte did not reply to an emailed question about the real estate tax payments.
A spokeswoman for the Buccini/Pollin Group said in an email that the listed sale price of $1 does not reflect the entire compensation involved in the sale of the buildings.
“We aren’t able to discuss the specifics of the arrangement,” the spokeswoman Claire Nester said.
Nester did not reply to a follow-up question, asking whether the modest taxes paid on the sale were legally sufficient.
Comments from Delaware’s government officials also did not shed light on the questions around the 10 cents in real estate taxes.
A spokeswoman for Wilmington Mayor John Carney said the city has no control over “what the property sells for.”
The Delaware Department of Finance declined to comment, stating officials are barred from speaking about realty transfer taxes because of a law prohibiting them from revealing details about tax returns.
And the chief financial officer for New Castle County — which collects realty transfer taxes in northern Delaware — said only that “we’re looking into it.”
How we got here
For more than a decade, Incyte has maintained its corporate headquarters just outside Wilmington’s city limits in the Alapocas community.
Buoyed largely by sales of successful cancer drugs, the company in recent years had attempted to grow the existing campus, but faced resistance from neighbors.
In light of the opposition, state and city officials began to collaborate then on a pitch to persuade the company’s leaders to instead expand downtown.
The efforts proved successful when Incyte announced in the spring of 2024 that it had purchased the pair of Bracebridge office buildings — which once served as a home for the credit card giant MBNA — for its global headquarters.
The nearly $50 million purchase was seen as a significant win for the city because the largely empty buildings had long weighed on the city’s office market.
Following the purchase, Delaware state officials awarded Incyte with nearly $15 million to help it pay for the move into Wilmington. During a meeting of the state committee that approves such subsidies, Kurt Foreman, then the head of Delaware’s public-private economic development, said the deal could lead to the creation of 866 new jobs in Wilmington’s downtown core.
Months after the state’s grant approval, Wilmington officials quietly awarded Incyte another $10 million for the expansion. The award was not publicly known until the Delaware Business Times broke the story in April.
During the remainder of 2024 and through 2025, Incyte spent nearly $29 million on a renovation of its new properties, according to a company earnings report.
Then, at the start of last winter, the work appeared to cease.
The stoppage came just months after Incyte had selected Bill Meury, a pharmaceutical executive with ties to Boston-area startups, as its new CEO, replacing longtime leader Hervé Hoppenot, who signed off on the deal with Delaware leaders. Weeks after assuming the helm, Meury stated the company would take “a fresh look” at its business, including its capital allocation, according to a report from Reuters.
In December, Incyte officials reclassified the two downtown Wilmington buildings as “assets held for sale,” according to a company earnings report.
Then they wrote off the value of the buildings on the company’s books by $76.3 million.
By February, Incyte publicly announced its scaled-back expansion plans through a series of media interviews in which officials said the company would sell the Bracebridge buildings to BPG, then lease back some of the space.
The leased space could “accommodate up to 200 employees,” company officials said.
In an earnings report released in April, the company said its sale cost it “an additional $23.2 million of expenses.”
It is not clear whether that $23.2 million relates to a portion of the taxpayer grants awarded by the city and state. When asked, a company spokeswoman said “the expenses noted in the quarterly filing are related to transitioning the project.”
Today, the status of the taxpayer grants and where that money might flow next are not immediately clear.
A spokesman for the Delaware Department of State that oversees state grants said earlier this spring that officials are “active discussions regarding this project and will reach out to you when we’re able to provide more information.”
Klinger, the spokeswoman for Wilmington, said the city and Incyte “are actively in the process of finalizing an agreement related to the $10 million incentive.”
For their part, BPG said they would not be seeking the Council on Development Finance funding that Incyte had received from the state for their plan to convert the buildings into a mix of apartments, offices and commercial space.
Reporter Brianna Hill contributed to this story.
