CoStar to Acquire LoopNet in $860M Deal

CoStar announced yesterday that it has entered into an agreement to acquire LoopNet in a transaction valued at approximately $860 million. The boards of directors of both companies have unanimously approved the deal which is expected to close by the end of 2011. CoStar has received a commitment letter from J.P. Morgan for a fully committed term loan of $415 million and a $50 million revolving credit facility. J.P. Morgan acted as CoStar’s financial advisor, and Simpson Thacher & Bartlett LLP acted as legal counsel to CoStar. Evercore Partners, L.L.C. acted as LoopNet’s financial advisor, and Davis Polk & Wardwell LLP acted as legal counsel to LoopNet.

"We are combining two very innovative companies that have transformed the commercial real estate industry," Andrew C. Florance, CoStar Group's Founder and CEO, said in a conference call announcing the agreement. "CoStar revolutionized how the industry researches commercial real estate and LoopNet revolutionized the way the industry markets commercial real estate. We believe that the combination of our two outstanding and complementary companies will lead to even more innovation and greater efficiencies by creating the premier Internet solution for the commercial real estate industry. We expect the benefits to our customers and ultimately our shareholders to be very significant."

"CoStar and LoopNet have been at the cutting edge of innovation in their respective businesses, and we believe the two companies will be even stronger together," said Richard Boyle, Chairman and CEO of LoopNet. "This transaction combines the capabilities and best practices of two successful and very complementary companies. We are excited about the possibilities that can be created together."

For more news and information visit Blumberg Capital Partners.

Panasonic Moving to New $190M Newark HQ

Panasonic Corporation of North America announced that it has entered into a lease agreement in Newark, NJ that will serve as headquarters to some 1,000 employees and contractors beginning in 2013. Steven Pozycki's SJP Properties will develop a new, state-of-the-art, sustainable high-rise office building worth $190 million under a joint venture with Matrix Development Group. SJP is scheduled to break ground on the 12-story tower no later than this fall and is scheduled to complete the 325,000 square foot building by 2013.

"This is a very exciting time in the life of Panasonic," said Joseph M. Taylor, Chairman and CEO of Panasonic Corporation of North America. "This is the culmination of a very exhaustive process for us in which we examined all of the options available to us that would meet our needs and goals for our future as a green business technology leader. We are most grateful to the State of New Jersey and City of Newark for their support and efforts to make it possible for Panasonic and its employees to remain right here in New Jersey."

"Today is a historic, game-changing moment for the city of Newark," said Mayor Cory Booker, speaking at a press conference at One Riverfront Center, which will be adjacent to the new property. Bringing Panasonic to Newark "is the single greatest economic development accomplishment of my administration."

For more news and information visit Blumberg Capital Partners.

Pittsburgh's Tallest Office Tower Sold for $250M

The U.S. Steel Tower, a Pittsburgh landmark and tallest building, traded hands this week for $250 million as Area Property Partners sold the property to a New York-based investment group according to a Daily Mail article. Area Property Partners originally acquired the property in 1999 when they bought part of a $265 million mortgage held by GE Capital. Peter Braverman, a shareholder in the buildings' managers Winthrop Management, said that the current building management will stay in place after the transition. "Every new owner tries to improve a building and provide better services, but there are no dramatic plans at this point," Braverman said.

The 64-story building at 600 Grant Street, completed in 1970 and built by U.S. Steel, is 92% occupied with major tenants including the University of Pittsburgh Medical Center, U.S. Steel Corp., and PNC Bank. "We could get to 100 percent (occupation), based on the expansion of UPMC," said Mark Karasick, a principal in the new ownership group. UPMC's renovation of executive and administrative offices at the tower won LEED-Silver certification for energy conservation and environmental design.

For more news and information visit Blumberg Capital Partners.

Morgans Sells Mondrian for $137M

Pebblebrook Hotel Trust has entered into a definitive agreement this week to purchase the Mondrian Los Angeles hotel from Morgans Hotel Group for $137 million according to a Wall Street Journal article. Under the terms of the deal, Morgans will continue to manage the hotel under a 20-year management agreement with one 10-year extension option. Morgans has received a $5 million security deposit, which is non-refundable except in the event of a default by Morgans. Pebblebrook expects to fund the purchase price with available cash and to close the acquisition during the second quarter.

The Mondrian Los Angeles is located on Sunset Boulevard and was originally built in 1959 as an apartment building. Reopened in 1996 after extensive renovation, the hotel is famous for its Asia de Cuba restaurant and Skybar bar and lounge.

Michael Gross, Chief Executive Officer of Morgans said, "This transaction further demonstrates the value of our real estate assets and our success in transitioning to an 'asset light' strategy. We are looking forward to a long and beneficial partnership with Pebblebrook as we continue to manage the hotel under the Mondrian brand with a long-term management agreement. The transaction proceeds will allow us to reduce our debt and fund the continued growth of our higher margin management business." Morgans has also recently agreed to sell the Royalton and Morgans hotels in New York. Reuters reported that Morgans has also been shopping the Delano in Miami.

For more news and information visit Blumberg Capital Partners.

Excel Trust Invests $68M in Gilroy Crossing

Excel Trust, Inc., a San Diego-based real estate investment trust, has acquired the 473,640 square foot Gilroy Crossing in Gilroy, CA for $68.5 million according to a GlobeSt.com article. The purchase price was below the roughly $80 million asking price announced by the center's former owner, Lakha Properties-Gilroy, in 2008. Excel Trust funded the purchase price for Gilroy Crossing with a $48.4 million mortgage and borrowings under its unsecured line of credit according to an SEC filing.

"We continue to pursue our strategy of sourcing well located, attractively priced real estate through off market transactions," Gary Sabin, Excel Trust chairman and CEO, said in a statement about the purchase.

Gilroy Crossing, which sits at the intersection of Camino Arroyo and Pacheo Pass Highway, originally opened in 2004 and is currently 99% leased with major tenants including Kohl's, Target, Sports Authority, Ross Dress for Less, Michaels, PetSmart and Bed, Bath & Beyond. The current annual net operating income is approximately $5.3 million.

For more news and information visit Blumberg Capital Partners.

MTA Seeks to Sell Madison Avenue Headquarters for $150M

The Metropolitan Transportation Authority (MTA) announced this week that it is seeking to sell three of its headquarter buildings in midtown Manhattan in an effort to consolidate office space. MTA said that it expects to yield at least $150 million from the sale and would use those funds to support MTA capital projects. MTA plans to relocate employees from the 341, 345 and 347 Madison Avenue buildings would be relocated near Grand Central and Metro-North’s other facilities, including an office facility in North White Plains.

"We are reviewing our real estate portfolio from top to bottom, looking for opportunities to reduce costs and increase revenue," said Jeffrey B. Rosen, MTA Director of Real Estate. "In our real estate, as in all of our operations, the MTA is making every dollar count."

Peter S. Kalikow, who was chairman of the authority from 2001 to 2007, said he had decided not to sell the buildings when he was in charge because they housed the Metro-North administration, which he believed should remain close to Grand Central according to a New York Times article. "Moving New York City Transit to 2 Broadway is best thing we ever did," he said in an interview this week. "But there are no Metro-North trains down there."

For more news and information visit Blumberg Capital Partners.

Former William Morris Building Sold for $42M

The 74,000 square foot office building at 150 South Rodeo Drive in Beverly Hills traded hands this month for $42 million according to a Los Angeles Times article. Real estate investment trust Douglas Emmett, Inc. bought the property from New York City-based Brickman for $568 per square foot. Built in 1991, the office building was 75% leased at the time of purchase.

The $42 million price "is reflective of the location and the interest that a place like Beverly Hills commands today," said Marc D. Renard of Cushman & Wakefield, which arranged the sale. "There are only two institutional quality office buildings in the world that have a Rodeo Drive address, and this is one of them." Bruce Brickman, president of privately held Brickman, also cited the quality and location of the building, saying "We are very pleased with the results that Marc and his team achieved."

For more news and information visit Blumberg Capital Partners.

Tech Companies in NY Set Up in Flatiron and Chelsea

A new article from the New York Times takes a look at the booming high-tech corridor, oft called "Silicon Alley", growing in Chelsea and the Flatiron district. Late last year Google announced that it would be purchasing an office building in the area for over $1.8 billion, effectively assuming ownership of an entire city block. But it's not the only internet-and-tech player in the neighborhood; companies like Mashable, Demand Media, Tremor Media and Bluewolf have all recently inked deals in Silicon Alley. An excerpt from the article:

Many companies have chosen Silicon Alley to be close to similar companies, which might be their clients, their suppliers, their competitors or a source of new hires. Mr. Dunn of Bonobos, for example, hired his vice president of merchandising from J. Crew, which is at 770 Broadway at East Ninth Street, and his vice president of marketing from the Gilt Groupe, at 2 Park Avenue, between 32nd and 33rd Streets, both nearby.

Prices are substantially lower than in Midtown and other prime office neighborhoods. Along Fifth, Madison and Park Avenues, rents can range from $50 to $75 per square foot, said Grant Greenspan, a principal of the Kaufman Organization. On the side streets, prices can fall to $26 or $27.

For more news and information visit Blumberg Capital Partners.

New Office Tower for Houston Skyline

BBVA Compass, a subsidiary of Compass Bancshares, Inc., announced this month that a new corporate office building is scheduled to break ground in May where the company will occupy roughly 150,000 square feet of space in a new 380,000 square foot Houston building. Redstone Companies, in a joint venture with Stream Realty Partners, is developing the new 22 story tower at 2200 Post Oak Blvd. according to a Houston Business Journal article. Manhattan Construction Co. is the overall general contractor for the project, HKS Inc. is the architect, Haynes Whaley Associates Inc. is the structural engineer and HOK will serve as the landscape architect.

"Combining our corporate offices into centralized locations in key markets such as Houston, Dallas and Birmingham is a natural evolution in the integration of our U.S. banking franchise," said Manolo Sanchez, BBVA U.S. Country Manager and President and CEO of BBVA Compass. "In addition to the eco-friendly design and state-of-the-art technology of the new building, bringing together our employees into a single location will foster a more open communication channel and sharing of ideas amongst our team."

For more news and information visit Blumberg Capital Partners.

UCLA Medical Facility Gets $38M in Financing

The University of California Los Angeles' partially constructed 50,000 square foot outpatient medical facility has received a $38 million, 12-month forward financing commitment according to a GlobeSt.com article. The 12-month forward take-out commitment secured a non-recourse loan with a 10-year fixed rate of interest at 5.67 percent, with 30 years amortization. The medical center project is scheduled to be completed in December 2011 and promises LEED Gold certification.

"The borrower wanted to eliminate financing risk and lock-in returns, given market volatility. But lenders have recently refused to commit more than three to six months before funding, and premiums for such hedging were prohibitive." said Steven C. Orchard, a Senior Vice President at George Smith Partners, which arranged the financing. "We were pleased to secure a loan that exploits the low interest rate environment, and controls exposure to inflation during the remaining construction period. It reflects well on the sponsor and the project, but it also says a lot about our team at GSP. It was the culmination of our firm’s market expertise and strong relationship with capital sources."

For more news and information visit Blumberg Capital Partners.

First Potomac Buys VA Office Building for $60M

One Fair Oaks in Fairfax, Virginia traded hands this week as First Potomac Realty Trust picked up the property for $60.25 million according to a Washington Business Journal article. The seller was an affiliate of Lehman Brothers Holdings Inc. while Cassidy Turley brokered the sale. "One Fair Oaks is a solid investment that enhances our portfolio with a stable, cash-flowing asset that is fully leased to a long-term tenant and is located in one of the Washington region’s leading office markets," stated Nicholas Smith, Chief Investment Officer of First Potomac Realty Trust. "This acquisition continues our balanced approach of building our portfolio with a mix of urban and suburban office buildings and stabilized and values add assets."

The fully leased office building was constructed in 1987 and underwent renovations and updates in 2005. The 12 story, 214,000 square foot building is located at the intersection of I-66 and Route 50 inside of the DC Beltway. CACI Enterprise Solutions (CACI) holds the lease to the property through 2016.

For more news and information visit Blumberg Capital Partners.

JV Finalizes $516M Portfolio Acquisition

A joint venture between CB Richard Ellis Trust and Duke Realty Corp. completed the purchase of a 20-property portfolio valued at $516 million according to a CoStar report. The deal, reportedly the largest transaction in the REIT's history, was broken into three phases of acquisition; this final phase covered 13 office buildings with 2.05 million square feet in four states for approximately $342.8 million. CBRE Realty Trust owns 80% of the partnership and Duke retains the remaining interest.

The properties included in the portfolio are listed as:

Norman Pointe I: Minneapolis, MN, with 212,722 square feet of space

Norman Pointe II: Minneapolis, MN, with 324,296 square feet of space

The Landings I: Cincinnati, OH, with 175,695 square feet of space

The Landings II: Cincinnati, OH, with 175,076 square feet of space

One Easton Oval: Columbus, OH, with 125,031 square feet of space

Two Easton Oval: Columbus, OH, with 128,674 square feet of space

Atrium I: Columbus, OH, with 315,102 square feet of space

Weston Pointe I: Ft. Lauderdale, FL, with 97,579 square feet of space

Weston Pointe II: Ft. Lauderdale, FL, with 97,180 square feet of space

Weston Pointe III: Ft. Lauderdale, FL, with 97,178 square feet of space

Weston Pointe IV: Ft. Lauderdale, FL, with 96,175 square feet of space

One Conway Park: Chicago, IL, with 105,000 square feet of space

West Lake at Conway: Chicago, IL, with 99,538 square feet of space

For more news and information visit Blumberg Capital Partners.

Wacker Drive Trophy Tower for Sale

311 South Wacker Drive in Chicago, the tallest building in the world known only by its street address, is being offered for sale at a yet-to-be-disclosed price according to an nreionline.com article. The owners, a venture comprised of affiliates of Fremont Realty Capital, Mark Karasick and Shorenstein Properties, will be exclusively advised in the sale of the 65-story office building by CB Richard Ellis' Chicago Capital Markets Group.

Originally constructed in 1990, 311 South Wacker was designed by Kohn Pedersen Fox Associates with 1.3 million square feet of rentable office and retail space. 311 South Wacker is the winner of Chicago's First BOMA International TOBY Award for the office building of the year in the over one million square feet category. The building is reportedly 91% leased to long-term tenants.

For more news and information visit Blumberg Capital Partners.

KBS Acquires City Place Tower in West Palm Beach

KBS Real Estate Investment Trust II has completed the acquisition of City Place Tower in West Palm Beach, FL for $126.5 million, plus closing costs, according to a South Florida Business Journal article. City Place Office 1 LLC, a joint venture of co-developers Crocker Partners and the Related Companies, sold the $110 million property at $427 per square foot. According to a public filing, the building is expected to generate nearly $73 million in rent from 2011 to 2015.

"City Place Tower is the newest office tower in the Central Business District and the only one built to current ‘hurricane resistant’ code and to offer full back-up power capabilities," said Shannon Hill, KBS Realty Advisors senior vice president, director of acquisitions and dispositions.

City Place Tower includes 8,390 square feet of retail space, plus the first six floors of the building contain 270 parking spaces. The tower was 86% leased at the time of sale with major tenants including Intech (Janus Funds), Cleveland Clinic, Carlton Fields, Edwards Angell, Novak Druce, Shutts & Bowen and Regions Bank.

For more news and information visit Blumberg Capital Partners.

CityCenterDC Breaks Ground

Construction began this week on six new buildings and a public plaza for the CityCenterDC Complex, a project that city officials say could cost $950 million and be one of the largest active developments on the East Coast according to the Washington Post The project is being 100% funded by equity financing with Qatari Diar Real Estate Investment Company as the anchor investor for the development. The financing was arranged by Barwa Bank’s investment banking subsidiary The First Investor. DC is leasing the property to Hines|Archstone for $500,000 annually over a 99-year period and expects to collect about $30 million annually in taxes according to the article.

Designed by Foster + Partners, CityCenterDC is a 10-acre, mixed-use development at the site of the old Convention Center in downtown Washington. The complex is expected to reach substantial completion by the fourth quarter of 2013. he first phase of the project, scheduled for completion in late 2013, is expected to include 185,000 square feet of retail, 458 rental apartments, 216 condominium units, 520,000 square feet of office and 1,555 parking spaces. A 350-room hotel and another 110,000 square feet of retail are planned for a second phase.

"This is one of the most valuable pieces of property in the world," said D.C. Council Chairman Kwame Brown. "It's going to create thousands of jobs and we have local equity participation, which means local business will own a piece of the development."

Mohammed Al Hedfa, CEO of Qatari Diar said, "We are delighted to provide the anchor investment in the TFI US Real Estate Fund. In conjunction with our co-investors and strategic partners, Hines|Archstone, we look forward to the realization of this landmark development."

For more news and information visit Blumberg Capital Partners.

55 Allen Plaza Sold at Auction for $57M

The Atlanta office tower 55 Allen Plaza was purchased from Barry Real Estate Companies in a foreclosure auction this week for $57 million (or approximately $163 per square foot), a 31% price cut from the original loan, according to a National Real Estate Investor article. Lincoln Property Company acquired the property on behalf of a pension fund client, Teachers Retirement System of the State of Illinois. Lincoln will also be leasing and managing the office tower.

The 350,000 square foot class-A office tower at 55 Ivan Allen Blvd. NE originally opened in May 2007 and is part of Hal Barry’s Allen Plaza. The property was 74% leased at the time of purchase with major tenants including Ernst & Young, Skanska, Cushman & Wakefield and ASD.

For more news and information visit Blumberg Capital Partners.

Artis REIT Buys Stinson Office Park for $44M

Artis Real Estate Investment Trust announced that it has purchased the Stinson Office Park in the Midway submarket of Minneapolis/St. Paul for $44 million according to the Minneapolis Star Tribune. The Canadian REIT bought the property from ERP Stinson Associates, a local investor group that includes Will Hoeg of Eagle Ridge Partners. The purchase price represents a going-in capitalization rate of 7.7%, is expected to be financed with cash on hand and from the proceeds of a new $28.6 million 5-year mortgage bearing interest at a floating rate currently equivalent to 3.25% per annum.

Stinson Office Park is currently 97% occupied with major tenants including Fairview Health Services and UCare. The 307,045 square foot office complex includes an additional parking structure providing 1,703 parking stalls.

For more news and information visit Blumberg Capital Partners.

Grubb & Ellis Receives $18M Financing Commitment from Colony

Grubb & Ellis Company announced that it had received an $18 million financing commitment from Colony Capital, LLC according to a CoStar report. As part of the commitment, Colony was granted the right to an exclusive 60-day negotiating period during which it can evaluate a potential larger strategic investment with Grubb & Ellis. Grubb & Ellis announced last month that it had been considering a possible sale or merger. If Grubb & Ellis and Colony enter into a definitive agreement for a strategic transaction, Grubb & Ellis retains the right to solicit competing strategic transactions for a period of 25 business days. JMP Securities served as financial advisor to Grubb & Ellis in connection with this financing.

"Colony Capital is a premier real estate investment and advisory firm with a strong track record of identifying undervalued real estate and corporate investment opportunities, and we welcome their support and the confidence they have shown in Grubb & Ellis," said Thomas P. D'Arcy, President and CEO at Grubb & Ellis. "We will work with Colony over the next 60 days as they focus on a possible larger strategic transaction. With this show of support by Colony, our clients and partners should feel confident that our experienced team of professionals will continue to provide the same outstanding service that they have come to expect from us."

For more news and information visit Blumberg Capital Partners.