Proposed New Building in Cambridge for Google

A letter dated February 27 to the City Council of Cambridge outlines a proposed connector building that would add 25,000 square feet of office space to the Cambridge Center, increasing the space currently leased to Google (now 300,000 square feet). Boston Properties, Cambridge Center owner, has released a full proposal for the new construction on behalf of its tenant.

"Google ... has outgrown its existing space and is looking to create an urban campus configured in a manner to facilitate its work processes, enhance its unique culture and help attract the best candidates for its workforce," Michael Cantalupa, Boston Properties' senior vice president, wrote in a letter to Cambridge City Manager Robert Healy. "The ability to expand ... is an essential component of Google's campus plan, without which Google has indicated that it will have to look elsewhere to meet its space needs ... It is our hope that the growth of Google in Cambridge will enable the city to realize economic and community benefits for many years to come."

According to a Boston Business Journal article, construction of the new space would require the city's approval to modify a pair of existing open space covenants that would reduce green space by 18,147 square feet — about 25 percent — from a park atop the East Garage. But Boston Properties said it would replace the lost open space with a new, 47,000 square foot urban park on land owned by the Cambridge Redevelopment Authority at the corner of Binney and Galileo Galilee Way.

"I'm very excited about Google wanting to expand in Cambridge," said City Councilor Leland Cheung. "It underscores that Cambridge is a great place to do business especially if you're in the innovation economy."

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Federal Reserve Picks up NYC Office Building for $207.5M

The Federal Reserve Bank of New York announced this week that it had acquired the Maiden Lane Building for $207.5 million from Merit US Real Estate Fund III, LP. The New York Fed established a new, wholly owned limited liability company called Maiden & Nassau LLC to serve as owner of the building. According to a CoStar Group report, Merit originally acquired the property in May 2002 for $125 million and chose to monetize the property as the fund it created was nearing the end of its investment life. CBRE's market-leading investment sales team of Darcy Stacom, William Shanahan and Paul Gillen acted on behalf of the seller in the transaction.

William C. Dudley, president of the New York Fed, said, "The purchase is a cost-effective way to meet our business needs and will enable us to more easily ensure appropriate security for our operations. We are also pleased to contribute, through our investment, to the ongoing revitalization of lower Manhattan."

The Maiden Lane Building at 33 Maiden Lane is a 27-story building with approximately 600,000-square-foot of office space. The New York Fed previously leased space in the building and was its primary occupant since 1998, occupying approximately 75% of the property with roughly 1,100 Bank staff working in the building.

For more news and information visit Blumberg Capital Partners.

Sentinel Square in DC Gets $181M in Financing

Trammell Crow Co. announced this month that Sentinel Square in Washington, DC received $181 million in financing provided by Landesbank Hessen-Thüringen Girozentrale and Norddeutsche Landesbank Girozentrale. The funding was arranged in two parts: one in permanent financing for Sentinel Square I at 90 K Street, the other to fund construction at 1050 First Street, NE, to build Sentinel Square II. CBRE Capital Markets arranged the loan on behalf of Trammell Crow and its joint venture partners, Crow Holdings Realty Partners IV, L.P. and Cottonwood Partners.

Sentinel Square I, a 12-story, 412,661 square foot office building, was delivered in June 2010. The property is currently 85% leased to multiple government agencies, including US Customs & Border Protection, US Department of Veterans Affairs, and the US Parole Commission. Sentinel Square II will be a 278,817-square-foot Class A office building designed to the same exacting standards as Sentinel Square I, including meeting Level IV security protocols and pursuing LEED Gold certification by the U.S. Green Building Council (USGBC) under its the Leadership in Energy and Environmental Design (LEED) Core & Shell program.

"We have experienced tremendous success over the past two years with the delivery and near lease-up of Phase I at 90K Street and believe that the market dynamics are prime for the delivery of additional highly secure, environmentally sensitive and affordable office space … in 2013," Thomas Finan, a managing director in Trammell Crow Co.'s mid-Atlantic office, said in a statement reported by Virginia Business. "The financings, arranged by the CBRE Capital Markets … will allow the partnership to retire its original construction debt, monetize the value created through phase I's success and start phase II immediately."

For more news and information visit Blumberg Capital Partners.

NAR Says CRE Vacancy Rates Improving, Rents Firming

The National Association of Realtors (NAR) released its quarterly commercial real estate forecast this month indicating that all of the major commercial real estate sectors are seeing improved fundamentals. Lawrence Yun, NAR chief economist, commented on the Commercial Real Estate Market Survey saying vacancy rates are improving in all of the major commercial real estate sectors. "Sustained job creation is benefiting commercial real estate sectors by increasing demand for space," he said. "Vacancy rates are steadily falling. Leasing is on the rise and rents are showing signs of strengthening, especially in the apartment market where rents are rising the fastest."

An excerpt from the office markets summary:

Vacancy rates in the office sector are projected to fall from 16.4% in the current quarter to 16.0% in the first quarter of 2013.

The markets with the lowest office vacancy rates presently are Washington, D.C., with a vacancy rate of 9.5%; New York City, at 10.0%; and New Orleans, 12.4%.

After rising 1.6% in 2011, office rents should increase another 1.9% this year and 2.4% in 2013. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is forecast at 20.1 million square feet in 2012 and 28.1 million next year.

NAR has made the Commercial Real Estate Market Survey available here. For more news and information, visit Blumberg Capital Partners.

First Insurance Center in Honolulu Sold for $70.5M

Pacific Office Properties Trust has agreed to sell the First Insurance Center building in Honolulu to Newton, MA-based Senior Housing Properties Trust for $70.5 million according to a report from Honolulu Star. Senior Housing Properties Trust is a publicly traded real estate investment trust affiliated with the REIT that is the largest owner of industrial property in Hawaii. The Pacific Business News reported that Pacific Office Properties, one of the largest owners of office properties in Honolulu, is selling the fee and leasehold interests in the Ward Avenue office building, whose largest tenant is First Insurance Co. of Hawaii, for $70.5 million, which includes the assumption of $52 million in existing debt, according to a statement from the San Diego-based REIT. The deal is expected to close by the end of the second quarter.

In its Q4 2011 results announcement, Senior Housing Properties Trust disclosed that in December 2011 and January and February 2012, the company entered five separate agreements to acquire one senior living community and four MOBs for an aggregate purchase price of $144.8 million, including the assumption of approximately $52.0 million of mortgage debt and excluding closing costs. The senior living community is located in Missouri and includes 87 independent living units, and all the residents at this community pay for services with private resources. The four MOBs are located in Connecticut, Georgia and Hawaii and include an aggregate of 514,409 square feet.

For more news and information visit Blumberg Capital Partners.

Chelsea Lot Sold for $20.5M, Prime Development

Marcus & Millichap Real Estate Investment Services announced this week that it had arranged the sale of 140-144 W. 28th St., a 75,000-rentable square foot parcel for $20.5 million. Barbara Dansker and Shlomo Manne of Marcus & Millichap represented the buyer, Upper East Side-based Sovereign Partners LLC, as well as the seller, West 28th St. Partners LLC, in the transaction.

The property is located in the Chelsea area of Manhattan between Sixth and Seventh avenues. The 76.67-foot by 98.75-foot lot has a maximum FAR of 10 and the property's current zoning is M1-6. Development options for the parcel include commercial and hotel. "The great thing about the sale of this parcel is that it is an inherently valuable piece because it is presently zoned commercial," said Dansker in a GlobeSt.com article. "It could be used for a hotel, even though there [are] already hotels on the block."

For more news and information visit Blumberg Capital Partners.

LaSalle and Bell Planning New Ashby House HQ

LaSalle Investment Management announced this week that, in a development partnership with Bell Hammer, the group had obtained planning consent for the construction of a new 86,500 square foot HQ office building to replace the existing Ashby House in Staines town centre. Knight Frank is advising on the project that will develop a new building aimed at national and international HQ occupants.

Mark Beckham of LaSalle Investment Management believes tenants will be attracted by the prominent town centre location, low running costs, large flexible floor plates and close proximity to Heathrow and the M25.

Joel Hawkins of Bell Hammer has targeted Staines as a priority location for new development in the Thames Valley as supply is restricted, rents have held up well and it attracts occupiers from the UK and overseas.

For more news and information visit Blumberg Capital Partners.

BGC Partners Picks Up Grubb & Ellis Assets

Grubb & Ellis Co. announced this week that it had filed for bankruptcy protection and agreed to sell the majority of its assets to BGC Partners. The proposed sale to BGC Partners Inc. will require court approval as part of Grubb & Ellis’ Chapter 11 bankruptcy process reported The Washington Post. The filing listed $150 million in assets and $167 million in debt as of the end of last year. BGC will provide financing of up to $4.8 million to keep Grubb & Ellis operating while the acquisition closes, according to the filing.

Howard W. Lutnick, Chairman and Chief Executive Officer of BGC, said that "this transaction reflects the deep and unwavering commitment of BGC -- the fastest growing, and one of the world's largest, global brokerage companies serving the financial markets -- to build a premier position in real estate services. We agreed to acquire Grubb & Ellis because we believe Newmark Knight Frank's and Grubb & Ellis' broad knowledge and extensive brokerage expertise, combined with BGC's powerful proprietary technology and our strong financial backing, will enable Grubb & Ellis to thrive and grow as part of the BGC family of companies."

Thomas P. D'Arcy, President and Chief Executive Officer of Grubb & Ellis, added, "We believe this transaction enhances our value proposition to our clients and strengthens our position in the commercial real estate marketplace. BGC's strong capital base, robust technology and deep commitment to its brokers provides Grubb & Ellis with scale along with the resources needed by our professionals to deliver exceptional service to our clients. We are confident this will be a seamless transition for our clients and that becoming part of BGC is an extremely attractive opportunity for our brokerage professionals and employees."

For more news and information visit Blumberg Capital Partners.

CCRSI Reports Office Property Strongest CRE Pricing Recovery In 2011

The CoStar Commercial Repeat Sale Indices (CCRSI) National Composite Index ended 2011 was released this month, reflecting continuing gains in apartments and growing momentum in the office sector. An excerpt from the report:

Investor interest in office property also rebounded in 2011, with the office property index increasing by 17.3% since the end of March 2011. Like the recovery of the broader economy, the office rally has proved to be volatile and uneven despite the significant firming up of prices.

"Pricing gains have proven to be more explosive in tech-centric markets than in the overall market," according to the CoStar CCRSI report. "The office index will likely continue to vacillate between gains and losses until office demand growth becomes more evenly dispersed across markets."

Industrial property pricing increased by just 4.4% since March 2011, and was down slightly in the fourth quarter compared to year-ago levels.

For more news and information visit Blumberg Capital Partners.

Tishman Takes Over 16 US Office Buildings

Tishman Speyer Properties announced that it would take over 16 office properties in the United States from its affiliated Australian REIT, Tishman Speyer Office Fund. According to a CoStar report, the fund owns 99.9% of four office buildings totaling 893,000 square feet and 45.9% ownership in another 12 totaling 7.46 million square feet. The Australian Fund agreed to sell the properties for $1.5 billion, plus an expected $48.5 million for transaction costs.

"The consequences of becoming a U.S. domestic reporting company are significant and burdensome, with consequential increases in costs to meet enhanced reporting and compliance obligations," the Australian company said.

The properties in the takeover include: 300 Park Ave. and CitySpire in New York; Greenwich American Centre in Greenwich, CT; Bala Plaza in Philadelphia; 227 West Monroe and 222 West Adams in Chicago; Plaza East I and II in Milwaukee; 520 Pike Tower in Seattle; One Bush Street and 595 Market Street in San Francisco; Bayside Towers in Foster City, CA; 400 Castro Street in Mountain View, CA; Lakeside in Northern Virginia; and Maples Plaza, 407 North Maple Drive and Beverly Mercedes Place in Beverly Hills, CA.

For more news and information visit Blumberg Capital Partners.

Empire State Realty Trust Files $1B NYSE IPO

Empire State Realty Trust, the company that controls the landmark Empire State Building in New York City, disclosed in a Securities and Exchange Commission (SEC) filing this month that it is planning a $1 billion initial public offering (IPO) in the coming months. Empire State Realty Trust will list on the New York Stock Exchange and trade under the "ESB" ticker, according to its SEC fillings. The realty trust controls 12 properties including the Empire State Building, two Westchester County properties in downtown White Plains and Harrison, and several other locations in Connecticut. Bank of America Merrill Lynch and Goldman Sachs Group Inc. will advise on the IPO.

According to Bloomberg, Malkin Holdings LLC, which owns the Empire State Building in conjunction with the estate of Leona Helmsley, said last November that it was considering joining a new REIT. Malkin Holdings is led by Peter Malkin and his son Anthony Malkin. The move is the culmination of efforts by the Malkin family to simplify control of its sprawling real estate holdings, reported the New York Times. The IPO will allow the Malkins to convert the equity held by other investors into stock in the new company, Empire State Realty Trust.

"Because it's got an iconic building as a centerpiece, I expect it will be successful anyway, but you're going to have more or less a higher percentage" of individual investors, said Lawrence Longua, director of the REIT Center at New York University's Schack Institute of Real Estate in a Businessweek article. For institutional investors, the owners "are very recognized names in the industry, so I suspect all in all, it'll do well," he said.

For more news and information visit Blumberg Capital Partners.

Divco West Picks Up Austin Office Complex for $53M

Divco West Group LLC, a real estate investment company based in San Francisco, announced this week that it had acquired Prominent Pointe I and II in Northwest Austin for $53 million. According to an Austin Business Journal article, Divco West secured the purchase with $33 million in financing secured through Texas Realty Capital in Austin's partner lender, Sun Life Assurance Co. of Canada. Austin-based Aquila Commercial arranged the transaction on behalf of the seller, Aspen Properties.

"We've had good success investing in the Austin market over the years, and as an owner/operator with a strong reputation among technology tenants, Austin — arguably one of the premier tech-oriented markets in the country — is one of our natural targets for investment," said Stuart Shiff, CEO of Divco West.

The two-building Class A office project in Austin totals 261,243 square feet between the two buildings at 8310 N. Capital of Texas Highway. The buildings were reportedly 91% leased at the time of sale, with 46 total tenants including Sony Online Entertainment LLC. Prominent Pointe I was remodeled in 2007 and Prominent Pointe II was constructed in 2008 to accompany it.

For more news and information visit Blumberg Capital Partners.

HNA Property Spends $130M on NYC Hotel

HNA Property Holding Group announced this week that, with a $65 million senior loan provided by PCCP LLC, the company was purchasing Cassa Hotel in midtown Manhattan for $130 million. Assa Properties sold the 165-room hotel portion of Cassa Hotel and Residences at 70 West 45th Street to the Chinese corporation, headquartered in Beijing, which will rebrand the hotel as a boutique luxury four-star hotel that will be managed by Viceroy Hotel Group.

"This investment gives PCCP the opportunity to originate a loan at an attractive basis on a newly constructed luxury hotel in a market with strong fundamentals," Rob Cohen, senior vice president with PCCP, said.

"New York City has demonstrated the ability to absorb new supply as exhibited by its historically high occupancy rates," Arthur Adler, a managing director with JLL Hotels said. "The City has rebounded from the recession, and the market will remain high on investors’ list of cities to target for investment in 2012."

For more news and information visit Blumberg Capital Partners.

Washington, Manhattan Lead Office Sales Volume

Cassidy Turley has released its 2012 State of the Capital Markets report, showing a sharp jump in sales in the Washington, DC area in 2011 with a sales volume trailing only Manhattan according to a Washington Business Journal article. The report shows that Washington, DC metro area’s office sales volume totaled $7.2 billion in 2011, reflecting a marked increase of 68% over 2010. The region saw 73 transactions completed over the year and ranked second, behind Manhattan, in sales volume among all office markets for 2011.

"Washington, DC continues to be a strong market for investors. Over the next 12 – 24 months, the bulk of the sales activity will stay in core to core plus properties," commented Bill Collins, Executive Managing Director with Cassidy Turley. "But those investors willing to stray from the safest bets and assume future leasing exposure will be rewarded three years from now as the economy turns the corner and demand for space turns robust," he continued.

Click here to view the full 2012 State of the Capital Markets Report. For more news and information visit Blumberg Capital Partners.

Exelon Building Will Add 500,000SF to Baltimore Skyline

Exelon Corporation announced this week that it had selected the developer, site and design for its new headquarters in Baltimore, expected to deliver by 2014 according to a Baltimore Business Journal article. Exelon chose Harbor East Development Group, LLC, as the developer for the proposed headquarters to be located at Harbor Point between Fells Point and Harbor East in Baltimore.

"We are excited to move forward with our plans to build a new Baltimore headquarters facility, bringing significant benefits to the City of Baltimore, including additional jobs and tax revenue," said Exelon President and COO Christopher M. Crane. "We are committed to Baltimore's downtown and its business district, and we look forward to being a growing part of the Baltimore community as the overall vitality of the city's downtown continues to flourish."

"It was clear from our first discussion with Exelon that they wanted a unique headquarters facility that would create a dynamic home for their growing Baltimore workforce," said Michael S. Beatty, President of Harbor East Development Group, LLC. "When people visit this site in three years they will realize just how committed Exelon and Constellation are to not only their employees but to the greater community and the environment. This project will be a model catalyst for the development of a truly sustainable and vibrant neighborhood."

Michael Beatty, president of Harbor East Development Group LLC, estimated that the Exelon building will be 500,000 square feet, 400,000 of which the company will use for its headquarters, and create 1,000 construction and other jobs and provide new tax revenue for the city.

For more news and information visit Blumberg Capital Partners.

Analysts Say 758 Banks at Risk of Failure

New industry analysis conducted by Invictus Consulting Group, an independent financial risk management and advisory firm, reports that at least 758 lending institutions are at risk of failure over the next two years, primarily due to the weak recovery, which could trigger a new wave of loan defaults. Invictus drew its conclusions after stress testing all FDIC-insured banks, using its proprietary ICAM(TM) (Invictus Capital Assessment Model). From a one to five scale of vulnerability (five being the most vulnerable), 758 banks were rated five.

"While any possibility of a bank failure is serious, what makes this situation even more dire is that the demise of any of these banks would adversely affect their local communities, especially smaller business people and those seeking to buy or improve their homes," said Kamal Mustafa, Chairman and CEO of Invictus. "Compounding the problem is the fact that larger national banks are starting to close down their smaller branches, so these communities will have even fewer lending resources."

For more news and information visit Blumberg Capital Partners.

Bank of America Considers Dumping Office Buildings

A new Bloomberg News article reveals that Bank of America is considering the sale of all of its office properties, except for its principle offices in New York and Charlotte, to raise capital and cut costs. Kelli Raulerson, a spokeswoman for Bank of America Corp., said that they "are currently reviewing all of our properties across our portfolio." Bloomberg notes that Bank of America owned or leased about 120 million square feet in 26,910 locations at the end of 2010, mostly in the U.S., according to its last annual report.

According to a San Francisco Business Times article, Bank of America CEO Brian Moynihan has been selling off non-core assets in something of an industry yard sale and raised $5 billion in a pricey deal last summer with Warren Buffett's Berkshire Hathaway. The press also reports that Bank of America has already planned leasebacks at three sites: the Fifth Third Center and the Hearst Tower in Charlotte and at 222 Broadway in Manhattan, Reuters reported. The company is also reviewing whether to sell its building at 100 Federal St. in Boston, the Boston Globe reported.

For more news and information visit Blumberg Capital Partners.

$92M America's Cup Project Kicks Off in San Francisco

San Francisco Mayor Ed Lee was on site on January 31st as construction crews broke ground on a $92 million project related to the 34th America's Cup events to be held in the city this year and in 2013. A new 88,000 square foot cruise terminal at Pier 27, which has been at the planning stages since 2007, will provide a gateway to cruise passengers well after America's Cup has wound up.

"This new cruise terminal, and the world attention that the America's Cup will bring to our waterfront, will benefit our local and global visitors, as well as our tenants and local businesses, for decades to come," San Francisco Port Commission President Doreen Woo Ho said at the event.

The terminal construction is expected to bring 600 direct jobs under Turner Construction, the contractor for the project, with the Department of Public Works managing the construction. KMD Kaplan McLaughlin Diaz and Pfau Ling Architecture JV designed the two-level terminal with an eye on landing LEED silver certification.

The centerpiece of the deal between the city and race organizers, led by billionaire Oracle co-founder Larry Ellison, has been that Ellison's group would pay at least $55 million to repair aging piers the city can't afford to fix to house team bases in exchange for long-term development rights to waterfront properties to recoup their investment reported the San Francisco Chronicle.

Click here to watch an ABC News segment on the groundbreaking. Visit Blumberg Capital Partners for more news and information.

Three Big Property Deals Mark a Week in Seattle

The Puget Sound Business Journal noted that the movement of three separate property deals totaling out at $118.8 million dollars shows improvement in the CRE sector in the area. The article notes that the transactions, all announced within a week beginning in late March, include:

The January 27th sale of two apartment properties in Kirkland as Colorado-based apartment investor Archstone purchased the buildings from Bellevue-based Continental Properties Inc. for $47.46 million. Continental previously bought the properties from the Seattle-based Skinner family in 2005 for $32.4 million.

The January 31st announcement that Griffin Capital Net Lease REIT Inc. purchased the West Willows Technology Center from Arden Realty for $40 million. The 155,830 square foot office park in Redmond includes three buildings and is fully occupied by AT&T Wireless Services Inc. under a long-term lease.

Redhill Realty Investors, a private equity investment firm, also announced on January 31 that it had sold the Hampton Bay Apartments in Kent for $31.4 million to Hampton Bay of Vancouver.

For more news and information visit Blumberg Capital Partners.

Ernest Health Sold for $400M

Medical Properties Trust (MPT) announced this week that it had acquired Ernest Health and its portfolio of 16 properties for $400 million according to a Health Investor article. MPT will assume the real estate assets of 12 Ernest facilities and lease the properties back to Ernest under an initial term of 20 years with three five-year extension options. A venture between an MPT affiliate and existing management of Ernest will acquire Ernest Health, Inc. RBC Capital Markets, LLC acted as MPT's exclusive financial advisor for this transaction. According to the article, MPT intends to fund the acquisition with a combination of borrowings under its revolving credit facility, borrowings under a new $80 million term loan facility from JP Morgan Chase Bank, NA and RBC Capital Markets, as well as net proceeds from other debt or equity capital market issuances.

"With transformative, highly accretive transactions like these, we continue to demonstrate our unique ability to create high quality long term sources of cash flow from hospital real estate," said Edward K Aldag, chief executive of MPT. "Completing these transactions will give MPT upside potential to the long term growth of Ernest, and adds another premiere post acute hospital operator to our relationships with others such as Vibra, Kindred, Healthsouth, LifeCare, Cornerstone and Post Acute."

For more news and information visit Blumberg Capital Partners.