AMB Property And ProLogis Merging

AMB Property Corporation and ProLogis have announced a definitive agreement to merge today, creating a real estate company with a total market value of $24 billion according to a New York Times article. Under the terms of the agreement, each ProLogis common share will be converted into 0.4464 of a newly issued AMB common share, and the combined company will be an UPREIT. The merger is subject to customary closing conditions, including receipt of approval of AMB and ProLogis shareholders. The companies reportedly expect the transaction to close during the second quarter of 2011.

"This merger is about two great companies coming together to create a stronger platform for sustainable value creation and growth. By joining forces, this merger will create a company positioned to be the leading global provider of logistics real estate – a Blue Chip REIT," said Hamid R. Moghadam, AMB CEO. "The combined company will be a global player active on four continents. This enhanced platform will enable us to better serve the needs of multi-market customers and provide them with both existing world-class facilities and unmatched development capabilities."

"This combination will help create the most efficient, effective industrial real estate organization with the best, most diverse talent. And, we have developed an achievable plan to put these companies together seamlessly," added Walter C. Rakowich, ProLogis CEO. "The merger of these two leading industrial platforms will advance a number of priorities already underway at each company. These priorities include improving efficiency and reducing costs by better aligning our portfolios through the reduction of non-core assets and the recycling of capital into higher growth opportunities; increasing asset utilization by stabilizing the operating portfolio; leasing up the development portfolio; and monetizing the land bank."

For more news and information visit Blumberg Capital Partners.

NAR Says Commercial Sector to Improve in 2011

The National Associaton of Realtors posted a new video this week with a commercial real estate update for January 2011. Jed Smith, Managing Director, Quantitative Research, and George Ratiu, Research Economist, discussed metrics from NAR's latest Quarterly Commercial Real Estate Market Survey. The survey is a new quarterly project measuring activity in the commercial real estate markets and collects data from commercial Realtors with the aim of providing members with an overview of the market performance, sales and rental transactions, current economic challenges and future expectations.
Survey hilights include:

• Sales volume was virtually unchanged in the third quarter compared with a year ago.
• Sales prices declined 13% in the third quarter on a year-over-year basis.
• Leasing activity advanced 4% from the previous quarter.
• Rental rates declined 7% compared with the previous quarter.
• Concession levels moved up 7% on a quarterly basis.
• Financing continues to top the list of most pressing current challenges, followed by the national economy.
• The estimated average transaction value rose 27% from the previous quarter, to $1.4 million.

Smith and Ratiu reflect on the survey's findings that even though right now, with high vacancies and low rents, the market remains difficult, there are signs of recovery in the market in the coming year and even more room for significant improvement in 2012. Click here to watch the video.
For more news and information visit Blumberg Capital Partners.

Parkway Properties Makes $167.3M Purchase in GA

Parkway Properties completed the acquisition of the office and retail portion of a mixed-use development in Buckhead, GA for $167.3 million according to a GobeSt.com article. Jones Lang LaSalle represented the seller, Regent Partners, in the transaction. Parkway assumed the $89.6 million first mortgage that was in-place at the property.

3344 Peachtree is the office and retail portion of a 50-story, vertical mixed-use development in the greater Atlanta market with approximately 484,000 square feet of office and retail space. The property is currently 95% leased with major tenants including Jones Lang LaSalle, Weinberg, Wheeler, Hudgins Gunn & Dial LLC, SPANX, Littler Mendelson, and Fifth Third Bank. The residential component of the project, known as SOVEREIGN, contains 82 high-quality residential condominiums and is not a part of Parkway Properties investment. The project was developed in 2008 by Regent Partners, LLC and was designed by Smallwood, Reynolds, Stewart, Stewart & Associates; the project was awarded "Project of the Year" by the Urban Land Institute in 2009.

For more news and information visit Blumberg Capital Partners.

FCIC Report Examines Financial Crisis, CRE

The Financial Crisis Inquiry Commission delivered a report on the on the causes of the financial crisis to the President and Congress this week in which it found that the crisis was avoidable and a result of human actions, inactions and misjudgments, with some sections of the reporting addressing commercial real estate. An excerpt from the section titled "Leveraged loans and commercial real estate: you’ve got to get up and dance'" follows:

The credit bubble was not confined to the residential mortgage market. The markets for commercial real estate and leveraged loans (typically loans to below-investmentgrade companies to aid their business or to finance buyouts) also experienced similar bubble-and-bust dynamics, although the effects were not as large and damaging as in residential real estate. From 2000 to 2007, these other two markets grew tremendously, spurred by structured finance products — commercial mortgage–backed securities and collateralized loan obligations (CLOs), respectively — which were in many ways similar to residential mortgage-backed securities and CDOs. And just as in the residential mortgage market, underwriting standards loosened, even as the cost of borrowing decreased, and trading in these securities was bolstered by the development of new credit derivatives products.

Historically, leveraged loans had been made by commercial banks; but a market for institutional investors developed and grew in the mid- to late 1990s. An “agent” bank would originate a package of loans to only one company and then sell or syndicate the loans in the package to other banks and large nonbank investors. The package generally included loans with different maturities. Some were short-term lines of credit, which would be syndicated to banks; the rest were longer-term loans syndicated to nonbank, institutional investors. Leveraged loan issuance more than doubled from 2000 to 2007, but the rapid growth was in the longer-term institutional loans rather than in short-term lending. By 2007, the longer-term leveraged loans rose to $387 billion, up from $46 billion in 2000.

To read the full report click here. For more news and information visit Blumberg Capital Partners.

Sandler O'Neill Makes Longterm Play for 1251 Avenue of the Americas

Mitsui Fudosan America gained another long-term tenant this month as Sandler O'Neill & Partners inked a lease for 74,164 square feet in the 1251 Avenue of the Americas skyscraper in New York. While terms of the lease were not disclosed, CoStar reports that O'Neill's occupancy is scheduled for 2012. Sandler O'Neill & Partners was represented by Cushman & Wakefield while the owners were represented by Newmark Knight Frank.

1251 Avenue of the Americas, also known as the Exxon Building, was part of the later Rockefeller Center expansion (1960s-1970s) dubbed the "XYZ Buildings" on Sixth Avenue, (also known as Avenue of the Americas). In 1989 Exxon announced that it was moving its headquarters and around 300 employees from New York City to the Las Colinas area of Irving, Texas. Exxon sold the Exxon Building, its former headquarters, to a unit of Mitsui Real Estate Development Co. Ltd. in 1986 for $610 million. Tenants of the property include DLA Piper, Rothschild, Mizuho, The Bank of Tokyo-Mitsubishi, and Natixis, which recently leased a large block of space in the building.

For more news and information visit Blumberg Capital Partners.

Longfellow Plaza Sold for $49.5M

First Potomac Realty Trust has acquired the 125,119 square foot office building at 1211 Connecticut Avenue, NW in Washington, DC from Harbor Group International for $49.5 million. According to Holliday Fenoglio Fowler, which represented the seller, the purchase of the property was clear of debt. "1211 Connecticut Avenue NW is a core office building in a Class-A location along Connecticut Avenue, one of Washington, D.C.'s grand office, hotel and retail boulevards," said HFF senior managing director Jim Meisel in a National Real Estate Investor article.

The office building, known as Longfellow Plaza, is located is the bustling Central Business District of Washington and along the main thoroughfare of Connecticut Avenue. The neighborhood features a tremendous amount of retailers, restaurants, and hotels. Longfellow Plaza stands 8 stories tall with renovations to the elevators, restrooms, and common areas completed in 2008. Tenants include International Resources Group, TSI Conn Ave LLC and Washington Sports Clubs.

For more news and information visit Blumberg Capital Partners.

Hersha Buys Capitol Hill Suites in DC for $47.5M

Hersha Hospitality Trust announced this month that it had signed a definitive agreement for the purchase of Capitol Hill Suites, an all-suite boutique hotel in Washington, DC, for $47.5 million, or $312 thousand per key excluding closing costs. Hersha assumed a $32.5 million loan with a 5.81% interest rate and cash on hand according to a CoStar report. CoStar also disclosed that Starwood Hotels and Resorts Worldwide had previously sold the Capitol Hill Suites to AEW Capital Management for $38.14 million or $250, 935 per door in January 2007. Hersha's purchase price represents a forward capitalization rate of approximately 7.3% on the hotel’s projected 2011 net operating income, stabilizing at approximately 10%.

Jay H. Shah, Chief Executive Officer of Hersha, said in a statement regarding the decision to purchase, "As a large beneficiary of increased investments in federal and private sector capital outlays, the D.C. region has strong economic and employment fundamentals. The strong real estate fundamentals are equally attractive, with high barriers to entry and negligible planned construction forecasted for several years, combined with growing demand."

For more news and information visit Blumberg Capital Partners.

 

Freddie Mac's New CMBS K-Deal Offering

Freddie Mac announced this week that it would be offering new Structured Pass-Through Certificates ("K Certificates") multifamily mortgage-backed securities. The K-010 Certificates will be offered to the market by a network of dealers led by J.P. Morgan Securities LLC and Wells Fargo Securities LLC as Co-Lead Managers and Joint Bookrunners for the transaction. Barclays Capital Inc., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co., Jefferies & Company, Inc., and Merrill Lynch, Pierce, Fenner & Smith Incorporated have been named as Co-Managers for the transaction. The company expects to offer approximately $1 billion in K Certificates ("K-010 Certificates"), which are expected to settle on or about February 10, 2011.

"We are very pleased to announce our first K-Deal for 2011, which represents the first of many deals we expect to issue this year as our securitization activity grows," said David Brickman, vice president of Multifamily CMBS Capital Markets for Freddie Mac. "This offering also includes a new feature – this is the first K-deal in which two rating agencies were engaged to provide conventional public ratings."

For more news and information visit Blumberg Capital Partners.

W.P. Carey Acquires 6 Logistics Centers for €155

C1000 B.V., a Dutch supermarket company, sold six logistics properties located across the Netherlands to W. P. Carey & Co. in a €155 million ($207 million) long term sale leaseback deal according to the Wall Street Journal. W. P. Carey, a global investment management company specializing in long term sale leaseback and build to suit financing, finalized the deal under a long term triple net lease. Reed Smith LLP & NautaDutilh N.V. served as legal advisors to W. P. Carey, while C1000 was represented by Lexence N.V.

"W. P. Carey's investment has allowed us to convert illiquid fixed assets into cash," said Tom Heidman, CEO of C1000. "Our ability to reinvest this capital in our retail business supports our growth initiatives, including re-branding to the new ‘C1000 Red' store format as well as allowing us to pay down debt and optimize our capital structure."

For more news and information visit Blumberg Capital Partners.

Architects Find Intriguing CRE Projects in China

With the US Markets still in recovery, many American architectural firms are finding work in China with commissions to build challenging new buildings. The New York Times published a new article examining the opportunities being found in China with firms like Heller Manus Architects, a 25-employee firm in San Francisco, which is now doing two-thirds of its work in China. James Zhen of Goettsch Partners noted that the opportunities may be due to a shortage of Chinese architects with the qualifications to execute large-scale commercial projects. "In my opinion," he says, "what most of them are missing is not the conceptual ideas, but rather the experience and ability to turn the concept designs into reality."

An excerpt from the article:

As Americans take on Chinese clients, they are adapting to some fresh nuances in the architect-client relationship. It's a swirl of patient relationship-building, fast-track decision-making and lyrical moments that, they say, would be unusual in American business dealings.

Chris McVoy, senior partner at Steven Holl Architects in New York, says a developer in Beijing gave the firm three months to develop a concept for a high-rise housing project that replaced a Mao-era factory in the heart of the city. The firm injected into the project Mr. Holl's long-simmering ideas about urbanism, tapping the earth underneath for geothermal energy, and fixing everything it saw wrong with the dreary Soviet-inspired high-rises in Chinese cities.

"We thought they'd say, 'You're crazy, forget it,' and we'd walk away," Mr. McVoy says. "We presented to about 20 people, and when we were finished, of course they all looked to their president to respond first. He said: 'Anybody can build buildings. Few can build poetry.' "

The project was built, complete with glass bridges linking the towers like neighborhood alleys in the sky. It led to the even more radical "groundscraper" headquarters for China Vanke, a big developer based in Shenzhen in southern China. The structure is the size of the Empire State Building laid out horizontally and raised five stories off the ground to provide a public park below.

For more news and information visit Blumberg Capital Partners.

$1.2B NSA Data Center Breaks Ground in UT

The National Security Agency and the U.S. Army Corps of Engineers broke ground this month on a new $1.2 billion data center in Utah according to a Salt Lake Tribune article. The new facility at Camp W.G. Williams National Guard Post, project-managed by the U.S. Army Corps of Engineers, will be constructed by a joint venture between Balfour Beatty, DPR, and Salt Lake City-based Big-D Construction. The one million square foot facility is the largest Department of Defense project in the nation.

"This will bring 5,000 to 10,000 new jobs during the construction and development phase," Sen. Orrin Hatch, R-Utah, said at the groundbreaking event on January 7. "Once completed, it will support 100 to 200 permanent, high-paid employees."

"We've been fortunate here in the state," said Jim Judd of the Utah AFL-CIO labor unions. "The NSA project will pick up the commercial construction business. It will provide long-term employment help for the state until, hopefully, the economy recovers."

For more news and information visit Blumberg Capital Partners.

Festival at Riva Center Sold for $102.5M

American Realty Advisors purchased the Festival at Riva in Annapolis, Maryland for $102.5 million or $337 per square foot according to a CoStar report. The State Retirement & Pension System of Maryland sold the 304,251 square foot property with representation from CB Richard Ellis. "With corporate profits now at levels above their pre-recession peak and consumer confidence returning, Festival at Riva presents an excellent opportunity to capitalize on the long-term success of a well-positioned core retail property in the center of the Annapolis market," said Ray Kivett, American's Chief Investment Officer. The acquisition was completed on behalf of one of American's commingled real estate funds.

Located in the heart of the Annapolis retail market on the corner of Forest Drive and Riva Road, Festival at Riva is a 25-year-old complex anchored by the #1 grocer in the metropolitan area, Giant Food & Pharmacy, along with other major tenants which include T.J. Maxx, Michaels, PETCO and Party City. With approximately 65,000 vehicles passing by the center each day, Festival at Riva is ideally situated giving the property a competitive advantage in the market.

For more news and information visit Blumberg Capital Partners.

RREEF Picks Up Miami's London Square for $95.25M

RREEF, the real estate investment management business of Deutsche Bank's Asset Management division, purchased London Square in Miami for $95.25 million on behalf of an institutional client according to a CoStar article. WMD London Square, LLC, an affiliate of Boca Raton-based Woolbright Development, sold the property. The purchase was financed by a $44.1 million mortgage from ING Real Estate Finance.

"The acquisition of London Square, a high-quality mixed use property, provides our client with diverse, stable cash flow with long term growth potential," said Brian McAuliffe, RREEF Americas' Head of Transactions. "We are pleased to have identified this strong investment and believe that it further underscores the value of our global platform and local investment expertise for our clients."

London Square is a 299,103-square-foot property at the southeast corner of SW 120th Street and SW 137th Avenue. Built in 2008, the mixed use complex is 99% leased with major tenants including TJ Maxx/HomeGoods, Ross Dress For Less, and Miami Children's Hospital. The property covers 299,103 square feet including 60,665 square feet of Miami office space for lease.

For more news and information visit Blumberg Capital Partners.

New Report Shows Office Market Growth Trend

Cassidy Turley released a new report this week on the U.S. office market showing a positive growth trend after bottoming in the first quarter of 2010. Kevin Thorpe, Cassidy Turley’s chief economist, said that "the sustained improvement in demand for space, now spreading beyond the largest metros, coupled with tightening vacancy is certainly encouraging. However, the employment situation does not inspire robust projections for 2011. The U.S. economy is on track to build on the growth in 2010, but the U.S. office sector is still a minimum of 18 months away from a balanced market."

The office market showed signs of progress in 2010 as new lease deals added up to 80,000 square feet of positive absorption, compared to a loss of 418,000 square feet in 2009. According to Cassidy Turley, the national office vacancy rate fell 10 basis points in the fourth quarter to 16.7% and average asking rents registered at $21.24, down 2 cents from the previous quarter. The report also shows that 5.3 million square feet of new office space was delivered in the U.S. office market and there was 30.3 million square feet under construction – indicating two more years of limited new supply.

To read the full report, click here. For more news and information visit Blumberg Capital Partners.

CMBS Markets Better Than Anticipated

CoStar released a new article this week titled "CMBS Markets More Hardy Than Doomsters Speculated" observing that, despite analysts bracing for a flood of defaults, the CMBS markets appear to be performing better than anticipated. An excerpt:

Predictions earlier in the year of a CMBS tsunami of defaults flooding the market largely missed their mark. Delinquencies, which were forecast to hit 12% by 2012, now seem likely to top out at right around 10% this year. And issuance last year tripled from 2009's anemic $5 billion to $16.1 billion in 2010, with 40% of the year's issuance occurring in the last quarter of the year - a much faster recovery than many anticipated, according to Christopher T. Moyer, an associate with Cushman & Wakefield Sonnenblick-Goldman LLC.

"Three major factors contributing to the stabilization of the CMBS delinquency rate," David Tobin, principal of Mission Capital Advisors in New York, told CoStar. "New originations have helped reduce overall delinquency. Conduit programs have re-started or started anew because of the pending maturity avalanche that is expected, because secondary market performance of CMBS has been strong following the credit implosion, and because firms perceive CMBS to have less credit and regulatory risk than RMBS [residential mortgage-backed securities]."

For more news and information visit Blumberg Capital Partners.

Hilton Alexandria Sold for $121M

Crow Holdings, a privately-held firm based in Dallas, Texas, has purchased the Hilton Alexandria Mark Center for $121 million according to a GlobeSt.com article. Crow Holdings, which manages real estate investments for the Trammell Crow family, bought the 30-story, 496-unit Hilton from Denver-based real estate investment manager Amstar. Amstar originally bought the property in June 2006 for $93.2 million.

Amstar launched a comprehensive $9.3 million renovation on the property during 2006. After the renovation and having improved operations, Amstar refinanced the hotel during June 2007, allowing a full return of equity to its investors. Davidson Hotel Company will reportedly continue to manage the hotel. Adam Minnick, executive director of Amstar, said: "The Hilton Alexandria has been a case study of Amstar's hotel strategy. Acquiring the property at an attractive basis, improving the physical asset and streamlining the operations were key enablers of adding value, while the refinancing allowed our investors to hold the asset until BRAC became a reality and catalyzed the sale."

For more news and information visit Blumberg Capital Partners.

Broadstone Acquires 3 Properties for $36.1M

Broadstone Real Estate announced that Broadstone Net Lease, Inc., a private real estate investment trust (REIT), recently completed the acquisition of three triple net-leased properties for a combined purchase price of $36.1 million according to a National Real Estate Investor article. Altogether in 2010, BNL acquired 21 net-leased properties for a combined purchase price of $83.1 million.

The first property is the Unity at Ridgeway medical office property located in Rochester, NY. Unity at Ridgway is a Class A medical office property that is master leased to Unity Health System for 20 years. The four story, 120,000 SF building is subleased to a variety of tenants specializing in cardiology, OB/GYN, neurology, rehabilitation, diabetes treatment, medical imaging and others. Broadstone also purchased the 20,473 square foot Guardian Urgent Care Center located in Westminster, CO with an initial lease term of 15 years. The final property is a distribution center located in St. Louis, MO. The 81,000 SF property is leased to Jeffco Trucking for an initial term of 20 years.

For more news and information visit Blumberg Capital Partners.

West Pharmaceutical Building New HQ in PA

West Pharmaceutical has entered into a build-to-suit lease agreement for its new global headquarters in Exton, Pennsylvania according to a CoStar report. Located in Eagleview Corporate Center, just two miles from its current headquarters in Lionville, the new headquarters will feature 130,000 rentable square feet of office space and 41,000 square feet of laboratory and research space.

530 Regency Drive Associates LP, the landlords of the property, will construct, furnish and equip the new building. The lease will begin around January 2013 and will expire 15 years later with the option to extend for two additional terms totaling 10 years. It was reported that the annual base rent for the new headquarters is expected to be about $4 million per year.

For more news and information visit Blumberg Capital Partners.

Starwood Cap Acquires $157M CRE Portfolio

Starwood Capital Group announced this week that it had completed the acquisition of a non-performing commercial loan portfolio from a major Midwest Regional bank. The portfolio, with an outstanding principal balance of $157 million, was purchased for 40 cents on the dollar and consists of 137 commercial loans with concentrations in Florida, Indiana, Michigan, North Carolina and Ohio.

"This acquisition is another example of Starwood Capital Group's ability to create value in today's competitive real estate market while building on the momentum we have achieved with Starwood Global Opportunity Fund VIII this year," said Chris Graham, Managing Director at Starwood Capital Group. "Our real estate expertise and experience resolving and managing underperforming loans allows us to maximize returns for Starwood investors."

For more news and information visit Blumberg Capital Partners.

NYT Says Office Market is Making a Comeback

A new article from the New York Times reports that, for the first time since the collapse of the commercial real estate market, investors are returning with interest in office buildings with some properties commanding prices "reminiscent of the boom years". An excerpt:

Though the market is only now becoming active, last year about $27.7 billion worth of office properties worth $5 million or more had changed hands through mid-December, more than twice the volume in 2009, according to Real Capital Analytics, a New York research firm that tracks sales.

Some deals have been so costly that buyers have had to settle for low initial rates of return of 6 percent or even less. These yields, known as capitalization rates, have fallen faster for office buildings than for any other type of commercial real estate, Real Capital Analytics said.

To read the full article, click here. For more news and information visit Blumberg Capital Partners.

Navy Yard Corporate Center Project Breaks Ground in Philly

The Navy Yard Corporate Center, an integrating office and residential development with, retail shopping, restaurants, a conference center and a marina in Philadelphia, saw a groundbreaking on Monday on two of three planned flex buildings. The first two buildings will total 103,137 square feet of space. The facility at 4020 S. 26th Street will offer 51,560 square feet while its sister building at 4050 S. 26th Street will provide 51,577 square feet. A third building, which is expected to begin development once leasing of the first two is well underway, will expand the capacity by an additional 82,863 square feet. Liberty Property Trust and Synterra Partners also announced the signing of the project's first tenant as The Fretz Corp., an appliance wholesale distributor,agreed to lease 22,391 square feet, taking nearly half of the 4050 S. 26th Street building according to a CoStar report.

"The expansion of The Philadelphia Navy Yard as a growing center of business has been a smart investment for the city, developers and the companies that do business there. These two, new buildings will help the city to attract businesses that are new to the region or expanding within the city," said Mayor Michael A. Nutter. "I would like to thank PIDC, Liberty Property Trust and Synterra Partners for investing in the Naval Yard."

For more news and information visit Blumberg Capital Partners.