CalPERS Transfers $1.9B Portfolio

The California Public Employees' Retirement System (CalPERS) has transfered its CalEast Global Logistics industrial real estate portfolio, valued at $1.9 billion, to GI Partners and RREEF according to a CoStar report. "We have confidence in GI Partners and expect excellent performance from the CalEast portfolio going forward, given their strong returns since they joined our real estate program in 2001," said Ted Eliopoulos, CalPERS Senior Investment Officer, Real Estate. "RREEF's success with CalWest and their global breadth and expertise will be valuable in managing CalEast's European assets."

CalPERS made the transition as part of a strategy to restructure its real estate and shift assets to managers. CalEast was previously managed by LaSalle Investment Management while RREEF has managed CalWest Industrial Properties for CalPERS since 1998.

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NAR Says CRE Market Stabilizing, Vacancies Peaking

According to the National Association of Realtors® the commercial real estate markets are flattening out and appear to be stabilizing. The association expects modestly improving fundamentals in the coming year. "Property fundamentals are improving, investment capital is slowly flowing back into the sector, commercial mortgage originations are increasing, and demand for CMBS issuance is gaining traction," Standard & Poor's said in a Bloomberg report. An excerpt from NAR's office market findings:

Vacancy rates in the office sector, where a large volume of sublease space remains on the market, are forecast to decline from 16.7 percent in the current quarter to 16.4 percent in the fourth quarter of 2011, but with very little change during in the first half of the year.

The markets with the lowest office vacancy rates currently are New York City and Honolulu, with vacancies around 9 percent. All other monitored markets have double-digit vacancy rates.

Annual office rent is expected to decline 1.8 percent this year, and then slip another 1.6 percent in 2011. In 57 markets tracked, net absorption of office space, which includes the leasing of new space coming on the market as well as space in existing properties, should be a negative 3.7 million square feet this year and then a positive 16.4 million in 2011.

For more news and information visit Blumberg Capital Partners.

SHPT Purchasing $470M in Medical Office Properties

CommonWealth REIT has announced that it entered into an agreement to sell 27 medical office properties to Senior Housing Properties Trust for $470 million according to Senior Housing News. The sale, expected to be completed between now and June 30, 2011, covers properties that include approximately 2.8 million square feet of space and are located in 12 states. According to CommonWealth, it expects to realize net capital gains of approximately $174 million; the historical cost of the properties being sold is approximately $378 million and its current net book value of these properties is approximately $296 million.

The portfolio currently shows an average occupancy of roughly 95% with the majority leased to medical service providers and other tenants in medical related businesses. Senior Housing Properties Trust was formerly a 100% owned subsidiary of CommonWealth until it was spun out in 1999. As a results of agreements, Senior Housing Properties has rights of first refusal on the properties being sold. Both entities are managed by by Reit Management & Research LLC.

For more news and information visit Blumberg Capital Partners.

2121 K St Sold for $82.4M

TF Cornerstone has acquired 2121 K St., NW in Washington, DC for $82.4 million according to a GlobeSt.com article. The Washington, D.C. office of HFF (Holliday Fenoglio Fowler, L.P.) brokered the deal on the 190,458-square-foot, Class A office building sold by ING Clarion Partners. The property was bought free and clear of debt.

The recently renovated 11-story property is 66% leased to tenants including the United Mine Workers of American Pension Trust (UMWA), Economists Incorporated, Intl Research & Exchange, George Washington University and a recently signed retail lease with celebrity chef Bobby Flay's, Bobby's Burger Palace. "Washington, D.C. continues to rank as the top city for commercial real estate investment in the world," said HFF's Jim Meisel. "We had tremendous interest in this core plus investment opportunity as the leasing market in the CBD continues to improve."

For more news and information visit Blumberg Capital Partners.

WSJ Examines New HK Property Duties

The Wall Street Journal published an article title "New Rules Hit Hong Kong Property" which takes a look at the current climate of and regulations on real estate and property development in Hong Kong. Irina Fan, senior economist at Hang Seng Bank, said "despite the recent measures to cool the property market by the Hong Kong government, the rises in the private rentals will likely continue until the middle of next year as rental movements are lagging property prices." An excerpt from the article:

On Friday, the Hong Kong government slapped additional stamp duties on properties that are resold within two years and raised down-payment requirements on high-end home purchases. On Monday, government inflation figures showed Hong Kong property prices were up 15% in the January-September period, after a 30% surge in 2009.

Unlike previous measures enacted by the Chinese territory to cool prices, the new ones are considered more likely to have an immediate effect. DBS Vickers said it expects transaction volume could shrink 30% to 50% in the next three months as short-term speculators are driven out of the market. Other prospective home buyers, including genuine home seekers, are likely to adopt wait-and-see approach in anticipation of lower home prices.

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Scripps Announces New $2B Campus

Scripps Health announced plans to expand Scripps Memorial Hospital La Jolla into a regional medical campus. The $2 billiion project seeks to rebuild the 43-acre hospital over the next 25 years according to a CoStar report. The new campus will include three new hospital towers, medical offices, research and graduate medical education facilities and an outpatient pavilion. The groundbreaking for the first tower, the hub of the Scripps Cardiovascular Institute, is scheduled for June 2011. Following the completion of the first tower, construction will continue with two additional hospital towers, two new medical office buildings, research and graduate education facilities, and an outpatient care pavilion.

Funding for the hospital’s expansion will come from operating revenues, borrowing and community support. Thus far, $32 million of its $125 million fundraising goal for the first tower has been contributed in the form of philanthropic gifts. Hospital officials said the plan has been driven in part by a looming deadline to meet state earthquake safety standards according to a La Jolla Patch article. "We needed to do seismic retrofitting but took the opportunity to do more than that and build a medical campus that would meet the future needs of the community," Scripps La Jolla spokeswoman Lisa Ohmstede said.

For more news and information visit Blumberg Capital Partners.

Moody's Commercial Property Prices up 4.3% in September

Commercial commercial real estate prices saw a 4.3% rise in September according to Moody's Investors Service and Real Estate Analytics. The rebound marks the first increase since May and the largest gain in the history of the CPPI. Prices for office properties and industrial spaces decreased during the third quarter, down 3.8% and 4.3%, respectively. Compared to the year-ago third quarter, when office properties hit a recession low, prices are up 4.4%.

"Each of the summer months this year recorded declines in the 3%-4% range, followed by this month’s sizeable uptick," said Moody's Managing Director Nick Levidy. "The relatively large swings in the index in recent months are due, in part, to the uncertain macroeconomic environment and the low number of repeat-sale transactions."

For more news and information visit Blumberg Capital Partners.

Patricio Moving HQ to Quantico

The Quanitico Corporate Center in Stafford, Virginia will be the future headquarters for Patricio Enterprises, Inc. as the company announced its intent to relocate headquarters as early as next month. The Quantico Corporate Center is an 85-acre campus providing 1,000,000 square feet of office space capacity within 10 to 12 buildings. Patricio will begin construction of a 30,000 square foot office building on a 1.97 acre parcel of land in the complex late this year according to a Virginia Business article. The new building is being developed by the Silver Companies of Fredericksburg.

"This is a significant step for our business as we continue to grow and invest in the infrastructure required to support our global operations from our headquarters in the Northern Virginia area,” said Gabe Patricio, President of Patricio Enterprises, who expressed the importance of a continued commitment to the local area. Patricio Enterprises, Inc. is a service-disabled veteran-owned business and certified Small Business Administration 8(a) program participant that specializes in Total Life Cycle Systems Management support and consulting.

For more news and information visit Blumberg Capital Partners.

Blackstone Secures $514M Loan from Wells Fargo

Wells Fargo announced this week that it has funded a $514 million sindicated five-year loan to affiliates of Blackstone Real Estate Advisors accordinging to a BusinessWeek article. Blackstone will use the funds to acquire a portfolio of 182 industrial properties in 28 markets, totalling roughly 23.2 million square feet of space. According to the MBA's Commercial Real Estate / Multifamily Finance Firms Annual Origination Rankings for 2009, Wells Fargo originated more transactions involving industrial properties last year nationwide than any other firm in the U.S. Wells Fargo provides lending, servicing, advisory, intermediary, and structured solutions to a broad spectrum of investors, developers, and public companies in the commercial real estate sector.

"We're proud to be a part of a large transaction like this one," said Chip Fedalen, executive vice president and head of the Wells Fargo Real Estate Banking Group of the loan and ProLogis portfolio acquisition. "Wells Fargo has a long history in the commercial real estate sector and we continue to actively seek financing opportunities for attractive real estate assets with good quality sponsors."

For more news and information visit Blumberg Capital Partners.

Silver & Freedman Plans Move from Century City

Silver & Freedman, a California business law firm that's been in Century City for 35 years, made an announcement this week that it was exploring real estate options to move to a new neighborhood. According to the firm's managing partner, Barry Weisz, "Silver & Freedman has been on Century Park East for over 35 years and Century City has been an ideal location for business activity. However, we find that many of our clients might be better served at a more convenient location closer to the freeway. We value our clients' opinions and, given these and other factors, it's evident that we must consider a potential move." The firm said that they were seeking to sublease their current space on the 19th floor (26,000 square feet) while pursuing similar space closer to the 405 Freeway.

As the Los Angeles Times noted, businesses contemplating a move usually stay mum about their plans and let their real estate brokers work behind quietly behind the scenes. Silver & Freedman instead released a press release publicizing their plans to leave Century Plaza Towers. The Times goes on to point out that the area remains one of the region’s most expensive office markets with average asking rents of more than $3.87 per square foot a month, according to a report by brokerage Cushman & Wakefield.

For more news and information visit Blumberg Capital Partners.

Citi Property Investors Sold to Apollo

Apollo Global Real Estate Management, an affiliate of Apollo Global Management LLC, has finalized a deal to purchase Citi Property Investors (CPI), the real estate investment management group of Citigroup Inc. While the terms of the deal were not disclosed, CPI had assets under management of over $3 billion as of June 30 of this year according to a BusinessWeek article. As part of the transaction, a majority of CPI's employees will join Apollo Global Real Estate Management, which will take over the management of a number of CPI's funds, including its flagship funds, CPI Capital Partners Asia Pacific, L.P., CPI Capital Partners Europe, L.P., and CPI Capital Partners North America LP.

The Citigroup bank is on track to have less than $400 billion of unwanted assets, or 20 percent of total assets, by the end of 2010 as reported by Reuters, and is still 12% owned by the U.S. government, which originally planned to finish selling off the stake by mid-December.

For more news and information visit Blumberg Capital Partners.

Facebook Breaks Ground on $450M NC Facility

Facebook announced this month that it will be building a new $450 million data center in Forest City, North Carolina. Construction is already underway for Facebook's Rutherford Data Center, about 60 miles west of Charlotte, and is expected to continue over the next 18 months; when complete, the 300,000 square foot facility will house thousands of computer servers and employ a staff of 35 to 45 full-time and contract employees. The project will also create over 250 construction and mechanical jobs states InformationWeek.

"The Facebook brand represents constant innovation, expansion, and investment in new ideas. These are the core components of our country's job-creation engine," said Congressman Patrick McHenry. "We see the results of that here today, as Facebook's success has brought them to Forest City to make a great investment in this community. These are the jobs Western North Carolina needs to push forward in an economy increasingly dependent on new technologies."

"I think you will see it's a game changer for Rutherford County," said North Carolina Lt. Gov. Walter Dalton in a WYFF Greenville report. "Certainly it shows Rutherford County and North Carolina are ready for the 21st-century. We're competing in the 21st century economy and we're only going to move forward from here."

For more news and information visit Blumberg Capital Partners.

Fitch Report Shows US CRE Delinquencies Eased in October

According to Fitch Ratings the delinquencies on U.S. commercial real estate loans eased in October due to increased incidence of loan extensions. The exentions helped precipitate a slight drop in CREL CDO delinquencies and, as Fitch Director Stacey McGovern explained,"are short term remedies designed to allow added time for further negotiation of pending loan modifications."

CREL CDO delinquencies fell slightly to 12.8% last month (from 12.9% in September). Total loan extensions in October were reported at 58 in the month, which is significantly higher than the 2010 monthly average of 37 extensions. Asset managers reported $98 million in realized losses from the disposal of distressed assets last month. Total realized losses across such products rated by Fitch total more than $1.7 billion. "The risk still remains for realized losses to increase if real estate trends backpedal, though they have been in a relative holding pattern for the last few months," McGovern added.

For more news and information visit Blumberg Capital Partners.

OneWest Bank Buys $1.4B CMBS Portfolio

OneWest Bank, formerly IndyMac Bank, announced the purchase of a $1.4 billion multifamily and commercial real estate loan portfolio from Citibank. The deal, which includes approximately 600 loans as part of the portfolio, was closed immediately, the terms of which were undisclosed.

"We are pleased to be able to work with Citibank to complete this transaction. This portfolio purchase represents our ongoing commitment to Commercial Real Estate lending. We are excited to add quality earning assets to our balance sheet and look forward to providing all of the banking services that OneWest has to offer to our new customers," said OneWest Bank's President and CEO Joseph Otting.

For more news and information visit Blumberg Capital Partners.

Seda International Expands to US, Purchases Wisconsin Building

Seda International Packaging Group. based in Naples, Italy, has announced its plan for U.S. expansion and purchased the site of the first North American operation in Racine County, Wisconsin. Seda is buying a 323,610-square-foot warehouse and manufacturing facility in Park 94, at 12501 Globe Drive, according to Chicago-based developer HSA Commercial Inc. While a purchase price for the facility was not disclosed, Seda did say that it expects to make a $76 million investment in local operations.

Wisconsin will prove $5.7 million in tax credits to Seda and a $1.5 million Community Development Block Grant Forgivable Loan. Governor Jim Doyle spoke to an audience at the Center for Advanced Technology and Innovation (CATI) in Sturtevant and noted that the Seda expansion will create 189 new jobs.

For more news and information visit Blumberg Capital Partners.

Aviva Portfolio Sold for £36.5M

Aviva Investors has sold a portfolio of five offices to Knight Frank Investors for for £36.5 million according to a PropertyWeek.com article. The Pentagon Portfolio comprises 290,000 square feet of office space across five properties in Bracknell, Cegedim House in Chertsey, Pinnacle in Reading and Aquasulis in Slough.

Knight Frank Investors is an investment management business set up in April of this year and fully owned by Knight Frank LLP. Aviva Investors was represented by property consultants Strutt & Parker in the transaction while BNP Paribas Real Estate advised Knight Frank.

For more news and information visit Blumberg Capital Partners.

NAR Expects Steady Improvement in Commercial Market

The National Association of Realtors (NAR) held their 2010 Conference & Expo in New Orleans this month, coined "NARdiGras 2010: A Fountain of Inspiration" with 125 education sessions and insights from business leaders. NAR's Chief Economist Lawrence Yun and Hugh Kelly, clinical professor of real estate at New York University Schack Institute of Real Estate, shared their predictions surrounding the commercial market and indicated a slight improvement in commercial lending.

"Banks' profits have returned to healthy levels. As a result, it is inevitable they will return to the business they were created for, which is lending," said Yun. "Commercial real estate has experienced a sharp price correction, but there is still a shortage of buyers because of lack of adequate capital resources." Yun said with imports and exports in the U.S. rising, the demand for industrial space will improve. His commercial forecast shows steady improvement in the market with rents stabilizing and net absorption slowly improving. Yun also predicts a moderate GDP expansion of 2 percent to 2.5 percent in the next two years and an unemployment rate of eight percent in 2012 and six percent in 2015.

Kelly pointed out that most commercial mortgages have been random and idiosyncratic, stressing that the lending environment should not remain that way. "The banks are in the driver's seat, meaning they can cherry-pick deals and there is no stigma to turning away business," said Kelly. "The capital flow in the commercial real estate market has been very selective. To achieve full recovery, lending practices must improve."

For more news and information visit Blumberg Capital Partners.

Blumberg Capital Partners in the News

Blumberg Capital Partners was featured in an Arabian Business article titled "Gulf capital turns to US real estate, lured by distressed sales". An excerpt:

Arab investors that have historically favoured UK real estate are now looking to America, lured by tax cuts and low property prices, said Philip Blumberg, chairman of US-based investment management company Blumberg Capital Partners.

Property acquired by Middle East and African investors increased 140 percent between 2008/09 and 2009/10 from $1.1bn to $2.64bn, data from the National Association of Realtors showed.

"US tax policies are about tax cuts not tax increases so the US is emerging as a safe standard compared to Western Europe," Blumberg told Arabian Business.

To read the full article, click here.

16-Hotel Portfolio Sold for $291M

Apple Real Estate Investment Trust Companies (Apple REIT) has closed a deal to purchase 16 Marriott and Hilton affiliated hotels in seven states for $291.5 million according to a CoStar report. The seller, White Lodging Services Corporation, will continue to oversee the properties under long-term management agreements. The hotels included in the Apple REIT/White Lodging transaction are the SpringHill Suites in Fishers, Indiana and Salt Lake City, Utah as well as the Residence Inns in Mishawaka, Indiana; Phoenix, Arizona; and Mettawa, Illinois. The Courtyard by Marriott properties that are included are located in Phoenix and Chandler, Arizona and in Austin, Texas. Also part of the transaction are Hilton Garden Inn hotels in Mettawa, Warrenville and Schaumburg, Illinois; Austin, Texas; and Novi, Michigan. Apple REIT will also acquire Fairfield Inn and Suites in Austin, Texas and Chandler, Arizona and one Embassy Suites hotel in Tampa/Brandon, Florida.

"The transaction with Apple REIT, one of our industry's most professional and prolific owners of premium branded hotels, provides White Lodging with additional capital to continue executing our strategic growth plan at a time when many of our competitors are merely trying to stay afloat," said Deno Yiankes, president and CEO of investments and development at White Lodging.

For more news and information visit Blumberg Capital Partners.

First Potomac, AEW Acquire DC Office Building for $65M

First Potomac Realty Trust and AEW Capital Management entered into a 50/50 joint venture to acquire 1750 H Street, NW, in Washington, D.C. for $65 million. National Treasury Employee's Union sold the mult-story Class A office building in a deal that was contingent on the buyers assuming a $31.4 million loan from the seller.

"It fits well into our long-term business plan to grow our presence in the downtown D.C. market, increase the number of office buildings we own, and continue our focus on high-quality properties," said Douglas Donatelli, chairman and CEO of First Potomac in a Washington Business Journal article. 1750 H Street, NW is a 10-story 111,000-square-foot office building located approximately three blocks from the White House in Washington, D.C.'s central business district. The building is 100 percent leased to six tenants, including 46,900 square feet on the top four floors that is leased back to the seller, the National Treasury Employee's Union (NTEU) for a ten-year term.

For more news and information visit Blumberg Capital Partners.

Colony Closes $74M Deal in Falls Church

Colony Realty Partners' subsidiary, Colony Capital LLC, finalized the purchase of an office building in Falls Church, Virginia for $74.23 million according to a CoStar report. PacTrust sold the 10-story, 231,928 square foot office building for roughly $320 per square foot; according to CoStar Group information, the average asking rent per year is approximately $36 per square foot.

The building at 3190 Fairview Park was originally delivered in 1990 and renovated between 2006 and 2008 with current major tenants including General Dynamics, JPMorgan Chase and DynCorp International. "The sale of this trophy office property is further evidence that investors are actively seeking quality, well-located and stable assets in one of the strongest markets in the country," said Collins Ege of Jones Lang LaSalle, which led the sales effort on behalf of PacTrust.

For more news and information visit Blumberg Capital Partners.