One57 Tower Gets $700M Loan

Extell Development Co. closed a $700 million construction loan from Bank of America-led syndicate consisting of funds from Bank of America, Banco Santander S.A., Abu Dhabi International Bank, Capital One and the Bank of Nova Scotia for its massive mixed-use development at 157 West 57th Street, One57 Tower. According to a CoStar report, Bank of America will serve as administrative agent for the loan financing a portion of the project.

"It's a significant commitment from a major lender," said a spokesperson. "It shows the confidence [Bank of America] has in this development."

One57 is a new 90-story condo tower project that began selling units earlier this month; Extell is asking up to $4,000 per square foot for one-bedrooms; up to $4,150 per square foot for two bedrooms; up to $6,580 per square foot for three bedrooms; and up to $8,413 per square foot for four bedrooms, according to a copy of the Schedule A provided to The Real Deal.

For more news and information visit Blumberg Capital Partners.

Two Grand Central Tower Sold for $401M

Two Grand Central Tower in New York, which went to market in June of this year expecting a sale price of $370 million, sold this month for $401 million according to a National Real Estate Investor article. The tower was sold by a joint venture between Boston Properties, Goldman Sachs and Meraas Capital, which is controlled by Dubai's ruler, Sheikh Mohammed bin Rashid. The unnamed buyer assumed $176.6 million of mortgage indebtedness according to the REIT.

The 667,000-square-foot building at 140 E. 45th St. was developed in 1982 and later sold by Harry Macklowe. The joint venture originally purchased the property in 2008 from affiliates of Macklowe Properties as part of a $705 million deal that also included 540 Madison Avenue in New York City.

During an Earnings Call, Boston Properties' Douglas T. Linde commented on the sale of the property saying:

"The office mark-to-market is still getting stronger, about a positive $1.41 per square foot. It was nice to be able to announce today in our supplemental aspect that we actually closed our sale of Two Grand Central. I would say I was a little gun-shy, given what our experience was with the New Jersey sale or lack of sales for the last couple of quarters. But we sold the building for $400 million, $617,000 a square foot. And if you look at the supplemental information for the third quarter on an annualized basis, the income is $13.9 million. But the building, again, is only 74% leased. So you can do the math and figure out what the conical cap rate is if you want to think about things in that way.

The sale of this asset was really always a possibility ever since the initial acquisition. To be truthful, and I think a lot of you acknowledged this and commented to us, the building has a very different market position and leasing profile than the other portions of our New York City portfolio. And was distinct enough from that portfolio, that we just came to the conclusion that there was very little synergy to owning the building. And so we sold it when the time was right."

For more news and information visit Blumberg Capital Partners.

2012 Outlook Shows Slow, "Grind-It-Out" CRE Recovery

PricewaterhouseCooper (PwC) and the Urban Land Institute (ULI) released the Emerging Trends in Real Estate 2012 survey and forecast. The report predicts a "slowing, grind-it-out economic recovery" following a period of mostly sporadic growth, confined largely to a few real estate markets. Survey participants predict that 2012 will see an increased supply of properties for sale; however, due to economic uncertainty, interest among buyers may diminish.

"Job creation is clearly the critical ingredient for a sustained recovery in commercial real estate and the market participants we surveyed uniformly struggled to identify new employment engines. As a result, businesses are focused on squeezing profitability out of productivity gains, and families forced into belt-tightening are using less square footage, which follows ‘The Era of Less' sentiment we forecast last year," said Mitch Roschelle, partner, U.S. real estate advisory practice leader, PwC. "In 2012, investors expect pricing to level off in the top markets – and overall ‘buy' sentiment will subside, selling appetites will increase, and more owners will hold until the economy untracks. This is part of 'the new normal' as investors are coming to grips that they may not be selling for more than they paid."

For more news and information visit Blumberg Capital Partners.

Inland Real Estate Acquisitions Inc. announced this month that it had purchased a five property portfolio of retail buildings from NewQuest Properties on behalf of Inland American Real Estate Trust, Inc. Inland acquired the portfolio for $172 million with financing provided by Prudential Mortgage Capital Company.

"This portfolio is a natural complement to our current properties in the region," said Jeff Manno, vice president of asset management for Inland American HOLDCO. "These necessity-based shopping centers are the type of core real estate assets that fit our retail investment strategy. We believe this transaction will enhance our portfolio and be accretive to our earnings."

The properties cover over 710,000 square feet of retail space with an average occupancy rate of over 90%. Major tenants at the time of sale include Kohl's, Kroger, Lowe's, Sports Authority, 24 Hour Fitness, Best Buy, Cinemark and Dollar Tree.

For more news and information visit Blumberg Capital Partners.

Moody's CPPI Up 2.4% in August

The latest Moody's/REAL Commercial Property Price Indices report for October 2011 was released this week recording a 2.4% increase in August for the National — All Property Type Aggregate Index (CPPI), bringing it to 15.3% above the post-peak low recorded in April 2011. An excerpt from the report:

The share of distressed transactions included within this month's CPPI was 21.7%, down 5.9% from last month and the lowest level since January 2010. Prices for distressed transactions were down by 3.5% from the last month and are 6.9% above their post peak low set in August 2010. The reduced share of distressed transactions helped drive this month's overall price increase.

Looking forward, we do not envision significant price increases over the next year. While distressed transactions should be at or near their high water mark for this cycle, there is less CMBS loan origination to help support acquisition pricing, especially beyond the portfolio lender sweet spot of trophy properties and top tier markets.

"There's more caution," Robert Bach, chief economist for Grubb & Ellis Co., a Santa Ana, California-based brokerage, said in a telephone interview with Businessweek before the Moody's report was released. "Investors in general are a little more cautious, and that includes investors in commercial real estate."

For more news and information visit Blumberg Capital Partners.

$1.8B London Loan Portfolio Sold

Kennedy Wilson, an international real estate investment and services company headquartered in Beverly Hills, CA, announced this week that it had entered into an agreement to purchase a loan portfolio from Bank of Ireland for $1.8 billion according to a Bloomberg report. "The biggest opportunities are in Europe," said Chief Executive Officer William McMorrow in a telephone interview. "The U.S. banks have all raised capital and they're not under as much pressure right now to sell assets." The purchase will close in two phases, with $1.4 billion completed on Friday, October 21 and an additional $400 million expected to close at the end of November.

Mary Ricks, executive vice chair of Kennedy Wilson, said of the deal that the "Kennedy Wilson team did an excellent job on this complex transaction, and we believe that this closing will serve as a base for the company's further expansion in Europe."

About 70% of the loans are secured on office, apartment and retail properties in London reported The Irish Times. Bank of Ireland disclosed the transaction when it announced earlier this month that it had deleveraged the bank by disposing of about €5 billion of loans – half of it non-core loans – at a discount of 9% on their face value.

For more news and information visit Blumberg Capital Partners.

KS Partners Buys Building from New Boston Fund

KS Partners announced this month that is had successfully acquired 33 Boston Post Road in Marlborough, MA for $8.15 million from New Boston Fund according to a Boston Business Journal article. The purchase price reflects a value of $72 per square foot on the 6-story, 113,050 foot office buiding. Avidia Bank, a community bank based in Hudson MA, provided the acquisition financing and a funding facility for future capital improvements & leasing costs. The property was last purchased in 2000 for $12 million.

33 Boston Post Road , at the intersection of Boston Post Road and Northboro Road just west of the intersection of Route 495 and Route 20, was constructed in 1986 and caters to small to medium-sized tenants. The property is supported by strong retail, restaurant and hotel amenities, along with on-site amenities including a cafe and fitness center. The property also includes two annex buildings totaling 6,702 square feet. The building is currently 70% leased with major tenants including ECC, BayPath, Forefield and the Law Offices of Gary H. Kreppel.

"What we're seeing in the market is small-tenant growth," said Richard M. Griffin, senior vice president and director of investments at KS Partners. Most are companies already in the market that "are in need of expansion space," he said.

For more news and information visit Blumberg Capital Partners.

Office Market Shows Strong 3Q Absorption

A new market report from CoStar shows that continued strong leasing activity, coupled with barely any new construction, could lead to office rent increases in some U.S. office markets. The report notes that the U.S. office market absorbed 19 million square feet in the third quarter of this year according to data presented at CoStar Group's Third-Quarter 2011 Office Review & Outlook. An excerpt from the report.

The leasing activity helped lower the national office vacancy rate slightly to about 13.1% -- down nearly a half percentage point since hitting its peak a year ago. Should leasing activity remain at the level seen this past quarter, it would set the stage for future rent increases, since little to no new supply is being added. CoStar's analysis found office rents firming or already trending up in some key metros, and more increases are expected to spread across the country by 2013.

Leasing activity, which bottomed out in early 2009, increased in the third quarter as tenants signed long-term commitments to lock in low rents for higher-quality Class A and B buildings. Gross leasing is now approaching levels not seen since the first Internet company boom a decade ago.

The San Francisco Bay area, which has seen some of the most heavily discounted rental rates among office markets, led the country with 4.4 million square feet of net absorption in the third quarter. Similar net absorption strength was found in markets with heavy presence of technology and energy firms. The top five metros for absorption included Seattle/Puget Sound (2.5 million square feet absorbed) Boston (2.1 million square feet), Philadelphia (1.9 million), Houston (1.9 million) and Washington, D.C. (1.7 million). Northern New Jersey led a handful of markets that experienced negative absorption, also including Atlanta, Los Angeles, Westchester/So Connecticut, and Minneapolis.

For more news and information visit Blumberg Capital Partners.

$150M Constitution Square Project Breaks Ground

StonebridgeCarras broke ground this week on a new 345,000 square foot spec office building in Washington, DC at 3 Constitution Square according to a Washington Business Journal article. 3 Constitution Square, a $150 million investment, is speculative only in a technical sense explained Douglas Firstenberg, founding principal of Bethesda-based StonebridgeCarras; while the property has yet to sign on any tenants, Firstenberg is concerned with whether the building will go federal or private. "We think it's going to be a fun competition to see which it is," Firstenberg told the told the Journal. "Obviously our view is there's little development going on right now, and we're pretty excited about a project delivery in late 2013." Cassidy Turley has been retained to market the space.

The initial build phase of the complete Constitution Square project will comprise 1.6 million square feet including two Class A, LEED Gold Certified office buildings, 440 luxury apartment units, a new 50,000 square foot full service Harris Teeter grocery store and a 204 key Hilton Garden Inn. The site, master planned as a 2.5 million square foot, transit oriented, mixed-use development, encompasses an entire city block between 1st and 2nd and M and N Streets, N.E. and is designed as a model for integrated, mixed-use development. Constitution Square has partnered with NoMa's Business Improvement District and the D.C. Office of Planning to achieve designation of the area as one of the pilot programs areas for "LEED for Neighborhoods."

For more news and information visit Blumberg Capital Partners.

Crescent Sells 6 Properties to JPMorgan

Crescent Real Estate Holdings completed a transaction at the end of last month that didn't make many headlines but gave its stake in six Texas office properties to its partner, a unit of JPMorgan Chase & Co., according to a Fox Business News article. The properties are valued at about $2 billion and include The Crescent, a 1,134,826 square foot office and retail complex in Dallas, and Houston Center, a major mixed-use urban real estate development covering four buildings and almost 4.5 million square feet of Class A office space.

Crescent, owned in a joint venture between Barclays Capital and Goff Capital, originally bought into the portfolio in 2009 for an undisclosed sum. Details of the current sale were not disclosed, but it's reported that Crescent will continue to operate the properties for its former JPMorgan partners. The total value of the Texas properties in the deal is approximately $1.85 billion, which means the value of Crescent’s stake was about $444 million according to a Houston Business Journal article.

For more news and information visit Blumberg Capital Partners.

Coming Soon: New York's Tallest Residential Tower

CIM Group, a Los Angeles-based real estate company founded by two former Israeli paratroopers and a Drexel Burnham Lambert executive, is poised to released plans for New York's tallest residential tower according to a Wall Street Journal report. CIM has partnered with Harry Macklowe on the project, the plans for which reveal a tower in excess of 1,3000 feet tall at 432 Park Avenue with a total price tag of over $1 billion. The WSJ reports that CIM still needs to secure a construction loan worth as much as $700 million, but that Avi Shemesh, one of the founding principals at CIM, is confident they'll get the loan. "We have longstanding relationships with lenders," Mr. Shemesh said. "We anticipate our construction financing to be in place well in advance of any sort of deadline."

Designed by Rafael Vinoly, the new tower includes 128 condominiums with ceilings over 12 feet all, a 5,000 square foot driveway, and residential ammenities like golf training facilities and private dining and screening rooms. The 1,300 foot building will tower over every apartment building in the city by a few hundred feet when complete. The building will sit on the property by the park formerly occupied by the Drake Hotel, which was demolished by Macklowe in 2007.

For more news and information visit Blumberg Capital Partners.

Zynga HQ Hitting the Market

Another mega-offering is hitting the market in the San Francisco as the 670,000 square foot Zynga headquarters at 650 Townsend St. comes to market, with Michel Seifer, Paul Lee, and Rob Hielscher of Jones Lang LaSalle handling the transaction. According to the San Francisco Business Journal, the property is expected to bring in between $350 a square foot and $400 a square foot, or $234 million to $268 million, for the sellers, TMG Partners and Farallon Capital Management. The partnership originally purchased the property in 2007 for $116.9 million ($174 per square foot) and since invested another $85 million in the property for upgrades and improvements.

The property sits at the edge of both Mission Bay and Portrero Hill and was half vacant when the partnership first acquired the building. Computerworld published an online slideshow featuring the property after Zynga, best known for its online game Farmville, recently moved into the space. The 5 story building, previously used as the old Sega headquarters, features a 60-foot atrium, private theater, and fitness center and houses more than Zynga 1,700 employees.

For more news and information visit Blumberg Capital Partners.

Dispute Between HCP and Ventas Over Sunrise Senior Living

A new article from the Wall Street Journal, Battle Royal in Health-Care World, examines the fate of Sunrise Senior Living after a four year takeover move. According to the article, HCP Inc. recently sent a $102 million check to Ventas Inc., but Ventas now says it's seeking punitive damages, which Richard Anderson, an analyst at BMO Capital Markets, estimates could run as high as $300 million. An excerpt from the article:

Ventas's move opens a new chapter in a battle that has transfixed the typically collegial world of health-care real estate. It dates back to Ventas's C$1.8 billion (US$1.75 billion) acquisition of Sunrise Senior Living, a Canadian real-estate investment trust, in April 2007. Chicago-based Ventas successfully argued in federal court in Kentucky that HCP, sabotaged its deal with Sunrise after losing in the bidding process, forcing Ventas to pay a higher price.

The players know each other well. Ventas Chief Executive Debra Cafaro was a classmate of HCP Chief Executive Jay Flaherty at the University of Notre Dame.

Even if Ventas succeeds in collecting punitive damages, the financial pain won't be great for Long Beach, Calif.-based HCP, which has a market capitalization of $15 billion.

For more news and information visit Blumberg Capital Partners.

Trump Makes Moves on Foreclosed Doral Resort in Florida

Real estate giant Donald Trump announced this week that he’s buying the Doral Golf Resort and Spa in the Miami area for $170 million according to a Miami Herald article. The hedge fund Paulson & Co. and Winthrop Realty Trust foreclosed on the resort in January of this year, putting them into Chapter 11 bankruptcy by February. Next week there will still be an auction for the resort, but so far there aren't any other bidders for the property according to Winthrop CEO Michael Ashner.

Built in 1962, the property sits on 650 acres with a pool complex, water slide, and five golf courses. Best known for hosting an annual pro golf tournament, the Marriott-managed hotel is also a popular destination for large groups, meetings, and local events. "We thought that this would fit our portfolio and it would be our wish to bring it back to its original grandeur," Trump said in an interview. "I think we are better-equipped to bring it back to the highest levels of golf."

"It was a pleasure dealing with [the Trumps]. They stepped up and met their commitments in a very professional fashion," said Ashner in a Wall Street Journal article referring to the Trumps's ability to quickly present and sign an offer.

For more news and information visit Blumberg Capital Partners.

99 Cents Only Stores Reach Agreement to Sell for $1.6B

A new article from CoStar reports that 99 Cents Only Stores agreed to be acquired by affiliates of Ares Management LLC and Canada Pension Plan Investment Board for $20/share of common stock for a total value of $1.6 billion. The chain, founded in 1982, has 289 stores in the United States, most of which are located in California where 99 Cents Only is headquartered. As part of the deal, CEO Eric Schiffer, Chief Operating Officer Jeff Gold and Executive Vice President Howard Gold would stay in their current leadership roles and will serve as directors while founder David Gold would be chairman emeritus.

"We expect this transition to be a win-win for everyone as it delivers significant value to our shareholders," Schiffer told employees when announcing the deal. "It provides access to expertise to help us accelerate our growth, and helps ensure that we can continue to deliver extreme value to our customers and provide a great place to work for our 99ers. The news of this agreement should not be a distraction to any of us, as we do not contemplate any material change in the way the business is managed. It is business as usual."

99 Cents Only Stores is required to pay a termination fee of $47.25 million if it terminates the merger agreement under certain circumstances. Ares and the Canada Pension Plan would have to pay a $94.5 million termination fee. Since the announcement of the agreement, Weiss & Lurie, a national class action and shareholder rights law firm, has filed a class action on behalf of the shareholders of 99 Cents Only Stores in connection with the proposed acquisition alleging that it provides unfair and inadequate consideration to public NDN shareholders.

For more news and information visit Blumberg Capital Partners.

31 Penn Plaza in NYC Sold for $130M

Savanna, a New York-based real estate private equity firm, announced the acquisition of 132 W. 31st St., an office building near Madison Square Garden and Penn Station in Manhattan, according to a Crain's New York Business article. Jones Lang LaSalle advised the Seller, a joint venture between C&K Properties and Zamir Equities, in the off-market transaction. Savanna has appointed Jones Lang LaSalle as the leasing and property management team lead by JLL's Mitchell Konsker, Vice Chairman, along with Matthew Astrachan, Vice Chairman, and Matt Polhemus, Associate.

"We are excited to add 31 Penn Plaza to our Manhattan office portfolio," said Christopher Schlank, a managing partner of the firm, in a statement. "The neighborhood surrounding Penn Station and Madison Square Garden is a growing mixed-use sub-market with plans for millions of square feet in office, retail, residential and hotel development over the next few years."

Savanna's renovation plans include a brand new entrance and lobby, upgraded elevators and other maintenance additions to the property.

For more news and information visit Blumberg Capital Partners.

Jones Lang LaSalle Merges With Pacific Real Estate Partners

Jones Lang LaSalle Inc. announced this month that it has merged operations with real estate services firm Pacific Real Estate Partners Inc. Pacific was founded in 1992, and has offices in Seattle, Bellevue and Portland. Chicago-based Jones Lang LaSalle, which has more than 200 offices around the world, entered the Northwest market in 1995 according to the Seattle Times. Financial terms of the acquisition were not disclosed.

"The merger of Jones Lang LaSalle and Pacific Real Estate Partners was driven by client demand for broader and deeper services, as well as the anticipated growth of the Pacific Northwest," said Elizabeth Hearle, Northwest Market Director, Jones Lang LaSalle. "While this is a mutually beneficial merger for Pacific Real Estate Partners and Jones Lang LaSalle, the real beneficiaries are our clients who will now have access to a broader platform and local market expertise from a firm that is the clear leader in the market."

"By leveraging our strong combined capital markets and leasing capabilities, we will have the opportunity to expand our services, with a focus on property management. This will create a powerful and differentiated firm with growth potential that benefits Jones Lang LaSalle, Pacific Real Estate Partners and both firms' clients," said Hearle, who will continue to serve as the Market Director for the Pacific Northwest Region.

For more news and information visit Blumberg Capital Partners.

American Realty Advisors Picks Up 3 New Properties

American Realty Advisors announced the acquisition of three properties in Colorado, Texas and Illinois according to a Denver Business Journal article. The terms of the transactions were not disclosed, nor were the purchase prices of the properties. "The acquisition of these three high-quality core assets reflects a commitment to expanding our portfolio of well-located, income-producing properties that offer exceptional value and amenities to our tenants, but are also likely to generate superior returns for our clients and continued success on a firm-wide level," stated Stanley Iezman, American's Chairman and CEO.

The first property, Crescent VII, is a 135,044 SF six-story Class A multi-tenant office building located in the heart of the Denver Tech Center in Greenwood Village, Colorado. Some of the building’s tenants include United Airlines, Sun Microsystems and Re/Max. It’s also the south headquarters of CB Richard Ellis, though its brokers were not involved in the sale.

Deerwood Apartments is a 186-unit Class A luxury apartment complex in the heart of the affluent Tanglewood neighborhood, one of Uptown Houston's most desirable and exclusive communities. Deerwood offers tenants with spacious floor plans, a modern architectural design, penthouse terrace, tennis courts, pool/spa, putting green, picnic area with gazebo, and an overall first-class environment.

1900 Spring Road is a 100,303 SF multi-tenant office building in the distinguished Oak Brook submarket in the Chicago metropolitan area. The property is ideally-situated near Oak Brook Center Mall, one of the top-performing malls in the country, and offers easy access to mass transit and major expressways. The property enjoys a wide-range of amenities including a deli, a banking center and a conference room available to tenants.

For more news and information visit Blumberg Capital Partners.

Equity One Sells 2 CA Properties for $124.9M

Equity One announced this week that it had closed on the sale of two non-core assets in California for an aggregate sale price of $124.9 million according to a CoStar report. Trio Apartments, a 304 unit apartment building in Pasadena, CA was sold for $112.2 million, including the assumption of a $62.8 million mortgage. Equity One owned a 50% interest in the property. Park Plaza, a 73,000 square foot office building in Sacramento, CA was sold for $12.7 million, including the assumption of a $7.4 million mortgage. Equity One owned a 100% interest in the property. The buyers were not disclosed.

"We are pleased to continue our capital recycling efforts by selling non-core assets and redeploying the capital into extremely high quality shopping centers within our targeted markets" said Jeff Olson, CEO of Equity One.

Equity One also announced that they closed on the acquisition of Aventura Square in Aventura, FL for $55.5 million. Aventura Square is a 113,450 square foot shopping center anchored by Bed Bath & Beyond, Old Navy and DSW. Aventura Square is located at the intersection of Biscayne Boulevard and the William Lehman Causeway, just south of the Aventura Mall and adjacent to Equity One's Gateway Plaza property which is anchored by Babies R Us.

For more news and information visit Blumberg Capital Partners.

Rockpoint Group Sells Stake in Park Avenue Plaza

Rockpoint Group closed on the sale of a 49% stake in Park Avenue Plaza to an unnamed high-net-worth investor from Asia according to a Wall Street Journal article. Rockpoint's Fund III acquired a joint-control equity interest in Manhattan's Park Avenue Plaza in June 2010, with the remaining interest owned by the Fisher Brothers. The investment was acquired for approximately $570 per square foot according to the company website. The price of the sale was not disclosed and Rockpoint has yet to release a statement on the sale.

Park Avenue Plaza was designed by Skidmore, Owings & Merrill with 45 floors of Class A office space. The skyscraper features 12 corner offices per floor, column-free 45-foot interior spans, and an atrium lobby with waterfall-side café and European-style luxury retail arcades. Major tenants include BlackRock Inc., McKinsey & Co. and Swiss Re, according to the Wall Street Journal.

For more news and information visit Blumberg Capital Partners.

SL Green Venture Picks Up $416M Portfolio

In a venture formed with Stonehenge Partners, SL Green Realty Corp. announced this week that it had acquired eight retail and multifamily properties in New York City for $416 million. According to a Businessweek article, the purchase marks SL Green's first foray into New York's apartment market and raises the real estate investment trust's profile as an owner of Manhattan street-retail properties. Even with this purchase, apartments are likely to remain “tangential to their business,” said Alex Goldfarb, an analyst with Sandler O'Neill & Partners LP in New York.

The venture indicated that a key component of the transaction is 724 Fifth Avenue, a prestigious retail location located between 56th and 57th streets in Manhattan's Plaza District, where Prada currently occupies approximately 20,700 square feet of space. The property enjoys prime position along the "Gold Coast" of Fifth Avenue -- a retail corridor known to achieve some of the highest retail rents in the world. It is situated in the vicinity of other retail properties which SL Green has ownership of, including 717 Fifth Avenue, home to Giorgio Armani's flagship store and the future flagship store of Dolce & Gabanna, in addition to 720 Fifth Avenue.

Andrew Mathias, President of SL Green, commented "This is an exciting opportunistic investment for SL Green, which already has an outstanding track record in acquiring and repositioning New York City office and retail properties. We also are excited about making our first significant equity investment in the multifamily area, which helps to diversify our portfolio further while still maintaining our New York City focus."

For more news and information visit Blumberg Capital Partners.