AOL Selling Part of VA Campus to CBRE for $144.5M

AOL Inc. has agreed to sell part of its large office complex known as Pacific Corporate Park in Northern Virginia for $144.5 million according to a Washington Post article. CB Richard Ellis will take ownership of four office buildings no longer utilized by aol and two undeveloped parcels of land on the Dulles campus. The combined total office space is approximately 700,000 rentable square feet in the four buildings; AOL vacated the building by early 2010 and the space is currently 100% leased with most of the space leased defense contractor Raytheon for a 10-year term.

"While the Dulles campus is an important part of AOL's future, we simply had no need to continue owning the additional space -- having already moved all of our talent in Dulles to one side of the campus," said Artie Minson, Executive Vice President and Chief Financial and Administrative Officer at AOL. "With a long-term lease in place it made sense for us to pursue a sale to realize maximum value of these assets and add significant cash to our balance sheet."

"We find this is an excellent location and very attractive set of resources with respect to the Northern Virginia market," said Phil Kianka, executive vice president and chief operating officer at CB Richard Ellis Realty Trust. The trust's parent company, CB Richard Ellis Group, represented AOL in the deal.

For more news and information visit Blumberg Capital Partners.

Philip Blumberg on CNBC Asia Squawk Box 10/28/10

The Necessity of Investing In Commodities

The commodities market is one that investors need to be involved in, says Philip Blumberg, CEO of Blumberg Capital Partners. He told CNBC's Martin Soong & Adam Bakhtiar that he is concerned about China's growth trajectory.

Investing In Japan

Philip Blumberg, CEO of Blumberg Capital Partners tells CNBC's Martin Soong & Bernard Lo what he needs to see before he would start investing in Japan's real estate market.

Re-investing in US Real Estate

Philip Blumberg, CEO of Blumberg Capital Partners says he is looking to invest in "emerging markets" in U.S. He shares some of the top spots on his radar with CNBC's Martin Soong, Bernard Lo & Adam Bakhtiar.

Optimism About Japan

While investors are piling into "overheated " markets like China and Singapore, Philip Blumberg, CEO of Blumberg Capital Partners tells CNBC's Martin Soong, Adam Bakhtiar he sees reason to be more optimistic about Japan.

Google Considering $2B NYC Office Buy

A new article from the New York Post reports that Google is considering an incredibly large buy-in to the Chelsea neighborhood of New York City at a$2 billion price tag, a transaction that would value the property at $690 per square foot. The trophy building at 111 Eighth Avenue is only 18 stories tall but boasts 2,950,000 square feet of office space making it the second largest building in New York City. Google already leases over 550,000 square feet of the property with other tenants includig Nike, Sprint, WebMD, CCH Legal, Deutsch Advertising and Armani Exchange.

Taconic Investment Partners originally acquired 111 Eighth Avenue in January 1998 as part of a portfolio of assets that also included 95 and 99 Wall Street and 100 William Street. The company has since deployed a $50 million capital improvement program that overhauled vertical transportation, lobbies, common corridors, power plants and fuel delivery systems.

For more news and information visit Blumberg Capital Partners.

US Commercial Prices Fell 3.3% in August

The latest report from Moody's Investors Services has been released showing that commercial prices in the U.S. dropped 3.3% from July to August of this year, a continued decline in the market that's seen prices down some 45.31% since the peak set in October 2007. Moody's commercial real estate prices are now 19% lower than the consumer price index but analysts expect the index to "revert to a long term trend line close to that of the CPI".

"The commercial real estate market in the US has become trifurcated with prices rising for performing trophy assets located in major markets, falling sharply for distressed assets, and remaining essentially flat for smaller healthy properties," said Nick Levidy, Moody's managing director in a Property Wire article. The Moody's/REAL CPPI report is produced by the MIT/CRE and is a complimentary report to their alternative transaction based index (TBI) as it is published monthly and is formulated from a completely different dataset supplied by Real Capital Analytics, Inc. and Real Estate Analytics LLC.

For more news and information visit Blumberg Capital Partners.

£340M Leadenhall Building Deal Signed

The British Land Company and Oxford Properties, the real estate arm of the Ontario Municipal Employees Retirement System (OMERS) Worldwide Group of Companies, have signed a deal to develop the Leadenhall Building in London on a 50:50 joint venture basis. According to CBC News, the total development cost for the project is expected to be £340 million. The project will become one of the tallest and most iconic buildings in London offering 610,000 square feet of ofice space in the heart of Square Mile and will include a four storey landscaping public space at the base of the building.

“We are delighted to be announcing the development of the Leadenhall Building,” Chris Grigg, British Land's CEO, said Monday. “With its unique and iconic architecture, it is a building which will provide an unbeatable combination of style, presence, location and office floor space in the heart of the City of London.” Practical completion to shell and core is expected in Q2 2014.

For more news and information visit Blumberg Capital Partners.

Real Estate Investment World Japan - Keynote Address

Keynote Address: Insights into the growth potential and limitations of high-yield investing within the cyclical Japanese property market.

Thank you.

It’s very good to be back here in Tokyo after so many years.
The city is vibrant.
And complexes like this one, Mid Town, contribute to its staying at the top of world cities.

Our company invests in Class A and Class S properties primarily in the United States, and I anticipate as the deflationary environment abates over the next few years we will look to invest in Tokyo and Japan as well.

What's the reason for my optimism about Japan:

Its resilience and determination.

Japan stands to benefit as its collective strengths including a highly developed industrial base, innovative manufacturing and consumer sectors, its transport sector and its intellectual base become a resurgent force.

While Japan's overall economic and real estate have experienced decades of slow growth, and even sometimes deflationary periods, this will end as inflationary pressures grow globally.  A key investment assumption.

Capital flows will ultimately seek out opportunity here in Japan.

As investors, we plan to invest in your economy and in your real estate as well.

We believe in the fundamental economic and societal strength of Japan, Japanese companies and
the Japanese market.

So Japan is, and will continue to be, one of the world's major economic forces, in spite of intense
competition on all fronts.

Polarization of the world increasingly around:

• China and Chinese economic interests.
• Emerging markets and resource rich nations.
• And the developed world –
  the West and free Asia.

Commodities, real estate, infrastructure will be among the leading focus of economic investment.

In this environment I anticipate closer ties and partnerships with the US.

Conflicts are very widespread:

• Currency, economic and trade.
• Cultural and religious.
• Terrorism and rogue nations.
• Territorial conflict.

In Europe general and industry strikes abound - remarkably in the middle of a deep recession.

Responsible calls for austerity bring protest, strikes and violence. 

Violence threatens where there is political and nation conflict.

I don't say this to be pessimistic, just realistic.
Let's hope sanity prevails.

Investment capital and investors in this environment are understandably worried and much capital remains on the sideline.

However it’s missing opportunities in today's market while waiting for re-assurance of safety in tomorrow’s.

Fear is their enemy.

Looking to the future the world is much more dynamic and will be different in ways I know and ways I don't know.

Let me show you the real estate world I think we face together (with the caveat that world political conflict can overtake any market).

Japan's market and the rest of the world's intersect after this economic crisis. 

So the key to high yields will be much more like we have seen in the US.

And the risks will be too.

Inflation and commodities and core inflation impact will lift,

and sometimes threaten,

commercial Real Estate markets globally.

Inflation

Inflation will be due to:

• Fiscal inflation
• Consumption increase
• Scarce resource will drive commodity prices up.

Commercial Real Estate and office buildings in particular are really like a barge of commodities assembled in a way that generates strong inflation adjusted yields.

• Globally, indexed rents will prevail.
  
• As will rent inflation and replacement cost inflation
  
• Inflation and debt costs will rise globally.
  
• Hedging those risks will be important.
  

Risk mitigation in general will be more and more important in all cyclical industries.

High yields will require more discipline, and attention to risk.

Market Timing,

awareness of capital flows not just RE market conditions, operational competitiveness of tenant and tenant stability and what unusual for our
Industry - customer focus

And a stable tenant base - which means much more attention to basics and awareness of competition and repositioning opportunities.

In this environment new Fund products need to focus on current yield and upside with preservation of capital foremost.

We are the top duration investment manager in the US over the last 16 years.

Our new Funds, Real Estate, Commodities, Health Care and Media & Entertainment in this environment are focused on annual cash distribution, and risk adjusted returns.

Risk mitigation is key though.

As an example I will cite my company's experience in our cyclical markets which I believe will be much like what Japan will face.

Let's look closer at these issues.....

High yields will require more discipline, market timing, awareness of capital flows not just real estate market flows, operational competitiveness of tenant and tenant stability and what unusual for our industry – customer focus And a stable tenant base – which means much more attention to basics and awareness of competition and repositioning opportunities.

Buy low, Sale high, managed well in between, indexed to inflation equal high yield.

For those who believe they are smarter than the market, only more 2008’s lie ahead.

However in a world full of risk and volatility opportunities abound.
But only for those who act prudently, understand risk and timing and respect the market.

CPPIB Invests $91M in DC Market

The Canada Pension Plan Investment Board (CPPIB) announced a joint venture with Vornado Realty Trust wherein CPPIB acquired a 45% ownership interest in two Washington, DC properties for $91 million according to a CoStar report. CPPIB made an equity investment to assume 45% of the existing mortgage indebtedness for 1299 Pennsylvania Avenue (the Warner Building) and 1101 17th Street NW, two prime office properties in Washington D.C. owned by Vornado. Vornado Realty Trust said, "We are pleased to have CPPIB, one of the world’s most prominent institutional real estate investors, as a new partner in these two buildings. Like us, they primarily focus on top quality properties in major U.S. cities."

The Warner Building, is a 13-story class A office building with over 600,000 square feet of space located some three blocks east of the White House. The building also includes the historic Warner Theatre, a 1,850-seat theatre that has been restored to its original grandeur. 1101 17th Street NW is a 13-story office building containing over 200,000 square feet on the North East corner of L Street and 17th Street NW in Washington’s commercial/business district.

For more news and information visit Blumberg Capital Partners.

Phoenix VA Building Sold for $20.3M

Marcus & Millichap Real Estate Investment Services brokered the sale of a 95,558-square foot single-tenant office building in Phoenix, Arizon for $20.3 million, or $212 per square foot, a property currently leased to the U.S. Department of Veteran's Affairs. Located at 3333 North Central Ave. in Phoenix, the three-story office building sits on 4.9 acres within blocks of the VA Medical Center and St. Joseph's Hospital and Medical Center.

The buyer was an overseas investor based in the Netherlands which purchased the property in partnership with a private investor based in Oregon. Marcus & Millichap arranged acquisition financing in the amount of $15.1 million for the buyer; New York City-based CTL Capital originated the loan, which was then sold off to bond investors according to a GlobeSt.com article. "The facility was built-to-suit for the VA in 2003," said Travis Trautvetter, a senior associate with Marcus & Millichap. "The VA occupies the building on an original 20-year lease term. In addition to the strong credit of the tenant, the primary location of this property within Phoenix was a key driver of buyer interest. We received multiple offers on the property, reflecting the strong demand that exists in today's market for investment-grade assets."

For more news and information visit Blumberg Capital Partners.

ProLogis Sells $1.02B in Properties to Blackstone Group

ProLogis, a global provider of distribution facilities, has entered into an agreement to sell a North American industrial portfolio, its minority interest in a hotel property and interests in three of its property funds to Blackstone Real Estate Advisors for $1.02 billion according to a Reuters report. The portfolio covers 23 million square feet over 180 properties in North America, the sum of which is currently 95.6% leased with an average lease term of nearly thre years. The transaction is expected to bring ProLogis' year-to-date dispositions to more than $1.6 billion, exceeding its forecast for the year.

"We are pleased to announce this transaction and to have exceeded the top end of our expected range of dispositions," Walter C. Rakowich, ProLogis Chief Executive Officer said. "This transaction with Blackstone supports our strategy of redeploying our investment in non-strategic, direct owned North American assets into further de-leveraging and future development activity to enhance the geographic diversification and overall quality of our portfolio." The Hotel Property, which is being separately acquired by Blackstone affiliate Hilton Worldwide, Inc., includes ProLogis' approximately 25 percent minority interest in the Hilton New Orleans Riverside and an indirect interest in adjacent land and related affiliates.

For more news and information visit Blumberg Capital Partners.

Granite Tower in Denver is Up for Sale

Granite Properties Inc. has placed the Granite Tower in Denver up for sale for an undisclosed asking price according to the Denver Business Journal. Granite originally purchased the landmark property for $88.5 million in 2005, or roughly $160 per square foot, from Amerimar Enterprises Inc. of Philadelphia. Mike Winn and Tim Richey of Cushman & Wakefield of Colorado Inc. are marketing the building for Granite. Stephanie Lawrence, the managing director for Granite, said in the article that the company decided to place the skyscraper on the market now due to the improving national commercial real estate investment market, and the attractiveness of downtown Denver office buildings to investors.

The 561,000 square foot 31-story Granite Tower, located at 1099 18th Street, was originally built in 1983 and previously known as Plaza Tower as part of the two-square-block Denver Place complex. The building is currently 95% leased with major tenants including Anadarko Petroleum, Robinson Waters & O'Dorisio PC and Jackson Kelly PLLC.

For more news and information visit Blumberg Capital Partners.

Office Market Recovery Advancing Says CoStar Report

CoStar Group's 2010 Third Quarter Office Review and Outlook was released this week, confirming that the office market recovery is underway. CoStar's research shows that the recovery is still in its early stages and may not be abundantly evident in all US markets, but confirms that the 3rd quarter results in the office market posted positive net absorption for the second consecutive quarter.

"Leasing activity in the quarter was healthy and robust,"said Andrew Florance, CEO of CoStar Group in the company's webinar presentation. "We're now seeing the strongest leasing activity numbers we have seen since the peak of the market [in 2005 and 2006]." Hilights from some major markets follow:

New York: "What I am seeing in the office leasing market is smaller tenants getting lower renewal rents (dollars per square foot), taking less square feet be it renewed or tenants consolidating, and landlords doing more tenant improvements," said Adelaide Polsinelli, associate vice president investments for Marcus & Millichap. "Larger tenants are doing the same as smaller tenants except they are taking advantage of the lower rents and taking on more space in buildings where they want to stay for a longer time."

Boston: "The lifeblood of the Boston market is its knowledge-based sectors, and those innovative companies which by definition start small, then grow," said Mary Sullivan Kelly, senior vice president and chief research officer for Colliers Meredith & Grew. "I can tell you that anecdotally, we are seeing growth from a number of firms -- particularly small and mid-sized tech and life science firms, some increasing their space requirements marginally, some by 50% or more, and this is an encouraging sign."

Atlanta: "Today, while money may be cheap, credit (along with collateral) is nearly nonexistent. This leaves the tenant to face either paying for tenant improvements themselves or adjusting their business practices to fit an existing layout,"said Rob Hill, commercial brokerage sales and leasing with Hill Corporate Partners. "Paying for tenant improvements, from a practical standpoint, requires a longer term to justify (and depreciate) the expense. Unfortunately, in today's world, five years can easily see a company's whole business strategy change."

For more news and information visit Blumberg Capital Partners.

CA Selects Buyer for State Buildings at $2.3B

According to an Associated Press article the Department of General Services in California has selected California First LLC, a partnership led by Hines and Antarctica Capital Real Estate, as the buyer for 11 state office properties that went up for bid earlier this year with a winning offer of $2.33 billion. The sale will result in more than $1.2 billion for California's state general fund and $1.09 billion to pay off bonds on the properties. Over the next 20 years, the state will reportedly lease the offices back from the new owner at predetermined rates, and will no longer maintain, operate, or repair the buildings. All the leases with California First allow the state to buy back any or all of the buildings at anytime during the 20-year term. The offices included in the portfolio are:
  • Attorney General Building, Sacramento
  • California Emergency Management Agency Building, Sacramento
  • Capitol Area East End Complex, Sacramento
  • Elihu M. Harris Building, Oakland
  • Franchise Tax Board Complex, Sacramento
  • San Francisco Civic Center, San Francisco
  • Junipero Serra State Building, Los Angeles
  • Department of Justice Building, Sacramento
  • Public Utilities Commission Building, San Francisco
  • Judge Joseph A. Rattigan Building, Santa Rosa
  • Ronald Reagan State Building, Los Angeles

"Far from a fire sale, this was a stiff, multiple-offer competition that generated favorable pricing for the state," Kevin Shannon, vice chairman of CB Richard Ellis, which brokered the sale, said in a written statement. Rich Mayo, one of the chief investors, said California, despite its financial problems, is a reliable investment. The state is not a tenant prone to "run out on leases or anything," he said in a Sacramento Bee article.

For more news and information visit Blumberg Capital Partners.

South Florida Medical Office Buildings Bought for $47.1M

Tenet Healthcare Corporation, a health care services company, has sold nine of their South Florida medical office buildings to AW Property Company in a $47.1 million cash deal according to The Palm Beach Post. AW Property completed the deal through its joint venture with Behringer Harvard, a purchase that totaled 630,000 square feet. “This medical office portfolio provides an attractive value-added investment opportunity,” AW Property Managing Director Brian Waxman said in a news release.

The buildings sold in the portfolio include:

The Victor Farris Building, at 1411 N. Flagler Drive in West Palm Beach. The 148,000-square-foot medical office, next to Good Samaritan Medical Center, will get extensive upgrades.

The eight-story Palmetto Medical Plaza, a 130,000-square-foot building at 7100 W. 20th Ave., in Hialeah near Palmetto General Hospital.

Hialeah Medical Plaza, a 72,000-square-foot office building at 777 E. 25th St., near Hialeah Hospital.

The 56,000-square-foot North Shore Medical Arts building, at 1190 N.W. 95th St. in Miami, near North Shore Medical Center.

Four medical office buildings for a combined 207,000 square feet near Florida Medical Center in Fort Lauderdale.

The 20,000-square-foot St. Mary’s Professional Center, at 5035 Greenwood Ave. in West Palm Beach, near St. Mary’s Medical Center.

For more news and information visit Blumberg Capital Partners.

Philip Blumberg on CNBC Europe - Time to Invest in Dubai?

"I think places like Dubai still have a few years to go before they can wash out enough inventories so it makes sense from an investor perspective," Philip Blumberg, chairman and CEO at Blumberg Capital Partners told CNBC on real-estate prices in the Middle East.

A&B Sells Distribution Center for $43M

A&B Properties, Inc., the real estate subsidiary of Alexander & Baldwin, Inc.,has announced the sale of the Ontario Distribution Center for $43 million according to a BusinessWeek article. The 898,400 square-foot, three-building industrial park sits on a 38 acre plot in Ontanrio, California and was originally purchased by A&B for $27 million in 2000. Major tenants include Home Depot, Best Furniture, Quill Corp., and Crothall Laundry Service.

Norbert Buelsing, president of A&B Properties said, "We achieved an exceptional 97 percent average occupancy during our 10-year ownership and realized favorable pricing for the property. Consistent with our real estate investment strategy, we anticipate reinvesting the proceeds from this sale, through a tax-advantaged 1031 transaction, into other commercial real estate investments with good growth prospects."

For more news and information visit Blumberg Capital Partners.

One and Two Potomac Yard Sold for Nearly $250M

US Government Building Fund, LLC, a fund sponsored by USAA Real Estate Company, has purchase One and Two Potomac Yard in Crystal City, Virginia for almost $250 million according to a National Real Estate Investor article. The seller, Potomac Yard Holding Company, LLC, is owned by JP Morgan Strategic Properties Fund. "We are home to the federal government and have a strong regional economy, which is experiencing real job growth. Every investor should own here,” stated Bill Prutting Jr., senior vice president in CBRE’s capital markets institutional group, which arranged the sale, in an Oct. 1 press release announcing the sale of Potomac Yard.

The 621,774-square-foot, two-building office complex is located just miles from Washington, DC and is currently 90% leased to Federal Government agencies including the U.S. Army Corps of Engineers and the U.S. Agency for International Development, along with private sector tenant Thales, an international aerospace, defense and security contractor. One and Two Potomac began construction in 2004, completed in 2006, and was the first project to achieve LEED New Construction Gold recognition in the state of Virginia and remains the only LEED Gold certified and Energy Star rated property in Crystal City today.

For more news and information visit Blumberg Capital Partners.

Boston's John Hancock Tower Sold for $930M

Boston Properties Inc. announced today that it would purchase the John Hancock Tower and Garage in Boston in a deal valued at $930 million according to the Associated Press. The purchase price reportedly consists of $289.5 million of cash plus the assumption of roughly $640.5 million in debt. The debt being assumed from the seller, a joint venture between an affiliate of Normandy Real Estate Partners and an affiliate of Five Mile Capital Partners, is a securitized senior mortgage loan that bears interest at a fixed rate of 5.68% per annum and matures in January 2017.

"The bidding was as fierce as anything I've ever handled during my 30 years in this business," said Robert Griffin, who brokered the sale for Cushman & Wakefield, a real estate services firm.

The John Hancock Tower is an iconic 62-story, approximately 1,700,000 rentable square foot office tower located in the heart of Boston's Back Bay neighborhood and is New England's tallest building. The garage is an eight-level, 2,013 space parking facility. As New England's tallest building, the John Hancock Tower features a 360-degree panoramic view of the Back Bay, Charles River, Cambridge, the Public Gardens, Boston Harbor and Financial District.

For more news and information visit Blumberg Capital Partners.

Market Center Office Complex in SF Sold for $265M

Manulife Financial, a Canadian-based financial services group, has entered into the Bay Area real estate market with the purchase of Market Center in San Francisco for $265 million, or $344 per square foot according to CoStar. Manulife acquired the 770,044-square-foot, two-tower office complex from RREEF America, which previously bought the complex in a joint venture with Page Mill Properties from Tishman Speyer for $79.5 million in October 2003. Page Mill sold its interest to RREEF for $127.5 million in May 2006.

Connected by a large landscaped courtyard, Market Center consists of two office towers: 555 Market Street, a 21-story, 283,000 square-foot building completed in 1965; and 575 Market Street, a 40-story, 487,000 square-foot building added in 1975. The buildings have been extensively renovated and modernized with state-of-the-art systems in the last few years and are in the process of being LEED certified for environmental sustainability. "We identified San Francisco as one of several potential growth areas for our real estate business and we are optimistic about the possibilities in this and other key markets as we continue to look for core office and industrial investment opportunities to complement our portfolio across the United States, Canada and Asia," Kevin Adolphe, COO of Manulife's Investment Division, said in a statement.

For more news and information visit Blumberg Capital Partners.