Eurozone Worries Impact South Wales Market

Jones Lang LaSalle released its South Wales Report 2012 noting that "Eurozone worries" hit market confidence, leaving them to describe the 2011 market as disappointing. The performance of the Welsh property market over the next year is likely to be influenced by the market’s reaction to new policies. An excerpt from the report:

Commercial property markets mirror economic uncertainty

Sentiment has been on the slide for most of the last six months and this has impacted on UK property markets. Investors and occupiers have become more cautious according to the latest data. This has not been helped by a further squeeze on bank financing, particularly at the height of the Eurozone crisis last year. It was not a major surprise therefore, that in late 2011 IPD announced the first decline in UK commercial property values in over two years.

These subdued trends are set to continue in early 2012. For occupiers, decisions are likely to be delayed as long as the economic outlook is uncertain. Until a clear upturn commences, cost-cutting, not space expansion, will dominate. The short-term outlook for investment volumes is also weak, with activity propped up by equity buyers, such as private and sovereign wealth.

As the economy becomes more supportive, there will be a revival in occupier demand. With caution still the keynote, this will be driven by structural events or pre-lets in a market starved of quality supply. A recovery in risk appetite will also lift investment activity, notwithstanding ongoing shortages of debt finance. The thaw is expected to be gradual with core assets in safe havens, such as London offices, benefitting first – a trend we have seen to date.

For more news and information visit Blumberg Capital Partners.

KBS Closes on Plano, TX Office Complex

KBS Real Estate Investment Trust III announced this week that it had acquired Town Center Office Park, a 522,043-square-foot, three-building office complex in the Plano submarket of Dallas. While full terms of the deal were not disclosed, Citybizlist Dallas reported in February that KBS was under contract to buy the property for $113 million, plus closing costs, from North Dallas Town Center LP and Tennyson Development LP. The CBRE Dallas Investment team led by Gary Carr represented the seller in this transaction. Bill Rogalla, KBS Central Region Senior Vice President and Director of Acquisitions and Dispositions, handled the transaction on behalf of KBS.

The three buildings at Town Center Office Park -- the six-story, 156,757-square-foot Town Center One, the eight-story, 209,179-square-foot Town Center Two and the six-story, 156,107-square-foot Town Center Three -- were completed in 2001, 2002 and 2006, respectively, and are 87.5% leased to 51 tenants. According to commercialrealestatedirect.com, JPMorgan acquired the complex's first two buildings in 2004 for more than $66 million in a venture with CarrAmerica Realty and developed the third building a year later.

"North Dallas and specifically the communities of Plano and Frisco have consistently ranked at or near the top in the national job and population growth rankings," said Rogalla. "Town Center Office Park is located within one of the most prominent master planned communities in the DFW region and KBS is pleased to be in a position to increase its presence within this submarket."

For more news and information visit Blumberg Capital Partners.

JV Developing Major Life Sciences Project in Boston

Clarion Partners announced today that it had entered into a joint venture with National Development, Charles River Realty Investors and Alexandria Real Estate Equities to develop a major life sciences and biotechnology building in Boston, Massachusetts. Located in the Longwood Medical Area of Boston, the project, dubbed Longwood Center, will include 413,536 square feet of space over 11 floors, with flexible laboratory, office and retail space to support tenants.

The property will be anchored by Dana-Farber Cancer Institute, one of the world leaders in cancer research and care, which has already committed to lease approximately 154,000 square feet. The area is home to numerous renowned medical, research and academic organizations including: Harvard Medical School, Beth Israel Deaconess Medical Center, Brigham and Women's Hospital, Joslin Diabetes Center and Children's Hospital-Boston.

"This project truly represents the next chapter in leading edge global research and development," said Mark Weld, Managing Director and Portfolio Manager in Clarion's Boston office. "We are pleased join with our development partners and Dana-Farber in being an integral part of making this vision a reality."

For more news and information visit Blumberg Capital Partners.

Parc 55 Wyndham Sold for $235M

New York-based Blackstone Group successfully acquired Parc 55 Wyndham from Rockpoint Group for $235 million, or $231,984 per room, in a distress sale according to a CoStar report. No brokers were named in the deal and terms were undisclosed.

A Bloomberg report earlier this month noted that Blackstone, which owns the Hilton Worldwide chain, would hold 75% of Parc 55, and Boston-based Rockpoint Group,would own most of the rest after investing $10 million of new equity. The article went on to note that Archon Group, a unit of Goldman Sachs Group Inc., provided $152 million of debt financing to the new owners, according to one of the people.

Parc 55 Wyndham Union Square Hotel is nestled in the heart of San Francisco featuring 1,015 spacious guest rooms and 15 suites and more than 30,000 square feet of event space, plus three on-site restaurants.

For more news and information visit Blumberg Capital Partners.

Brandywine Sells Herndon Office Building for $91.1M

Brandywine Realty Trust announced this week that it had sold a 268,240 square foot office building located in Herndon, Virginia for $91.1 million, or $340 per square foot, to Wells Core Office Income REIT. Cassidy Turley marketed the property for sale on behalf of Brandywine.

"The sale of this property achieves our objective of maximizing value from our existing portfolio," stated Gerard H. Sweeney, President and Chief Executive Officer of Brandywine Realty Trust. "It strengthens our balance sheet by providing additional liquidity, provides additional capital for our investment activities and demonstrates our commitment to execute key components of our 2012 business plan."

Brandywine completed the development of this property known as South Lake at Dulles Corner in November 2008, with design work from Noritake Associates, and subsequently leased the entire building to Time Warner Cable Inc. according to a NASDAQ report. Last May, citybiz real estate reported that Brandywine was looking to sell some of its Northern Virginia assets so it could target commercial properties located within the Beltway and within the District.

For more news and information visit Blumberg Capital Partners.

Cole Acquires 8 Sylvan Way for $53M

Cole Real Estate Investments (Cole), on behalf of its HPFVI fund, announced this month that it had acquired 8 Sylvan Way, a 176,000 square-foot office property in Parsippany, NJ, for $53 million in an all-cash deal. The Hampshire Companies sold the property in a deal brokered by CBRE. The Hampshire Companies redeveloped the property in 2009, including a new design by the architectural firm HLW, and repositioned the property as one of Morris County's leading "trophy quality" office buildings according to an article from The Paramus Post.

"With the location of the property, long remaining lease term, scheduled rent increases and desirable corporate headquarters, this acquisition corresponds with our overall conservative, disciplined investment strategy," said Robert Micera, chief investment officer, office and industrial, for Cole. "The Morris County, New Jersey, office submarket boasts great fundamentals, considering its strong economic base and educated workforce, and we are pleased to add The Medicines Company headquarters to our growing portfolio of corporate real estate."

The property serves as The Medicines Company's global headquarters with approximately 12 years remaining on the current lease term, with two five-year renewal options. The Medicines Company is a global pharmaceutical company focused on advancing the treatment of critical care patients in a hospital setting.

For more news and information visit Blumberg Capital Partners.

Global Effects on US Recovery

Preliminary reports suggest Europe may be slipping back into recession. 
That's one major danger to the US recovery. 

China suffered a rare trade deficit earlier in the year caused by weak external and internal demand after 5 months of decreased purchasing activity, and now manufacturing sector declines.  
Europe's double dip which looms stronger, will be affected further if China, a major market for European exports, continues to stagnate and shrink.  

That combined with credit shortages in Europe, means the easing of the sovereign debt crisis earlier this year, following the European Central Bank's(ECB) massive aid package, may all be for naught if global recession puts more pressure on a banking system already teetering on crisis.  Defaults and shrinking credit will reintroduce huge sovereign risk to a Euro Zone out of options other than full restructuring with dramatic write off's.  
And with a further domino effect on country risk through out the continent. 

The effect on the US in the banking/financial  sectors and credit availability and exports sectors certainly will echo with bad news.  

That scenario is one that could de-rail a nascent and fragile real estate recovery in the US (below).  Always a precursor to more serious troubles.  

One North American zone (in a hazardous world economy Canada and the US continue to build closer ties and interconnections across industry, energy and resources) advantage is a better positioned corporate sector and more stabally perceived fundamentals and political systems.  
In a volatile risk and surprise filled world that's a major capital attractor. 

Next week's release by the ECB may shed some light on money supply and recent bank lending - but doesn't presage the future.  

More important to the North American zone outlook, are the upcoming corporate earnings reports. 

Banks are set to contract loan portfolios by $1 trillion. This de-leveraging, though needed, will put further strain on the refinancing markets. Bond yields in Italy and Spain edge up. The German offer of a financial boost to the Euro zone financial rescue Fund, the European Financial Stability Fund, may ease concerns temporarily.

But we expect continued problems in Europe, absent some good news on fundamentals soon.

Fragile Recovery for Home, Investment Markets

While the February home sale figures dip, home sale statistics are affected by the economy underpinning them, generally several months preceding the home purchase decision, and the closing several months later.
Therefore the associated sale and pricing figures are lagging indicators by 3-4 months or so.

With this in mind we are now seeing stronger investor interest as recent employment rates improve and the outlook for the residential market demand improves.

This coupled with a bit more flexible bank lending policy for home mortgages
suggests an improving outlook for US home sales and a stabilized pricing
environment.

Bodes well for investment in the US residential market.  Though I'd term it a
fragile recovery, that could easily lose traction if global economies, with a particular eye on Europe, retreat throwing US employment figures negative.

Grubb & Ellis Cancels Asset Auction

Grubb & Ellis canceled the auction for its assets this week with an announcement that none of the bids topped BGC Partners' offer, which would forgive the $30 million already owed to BGC in exchange for the assets, while also providing bankruptcy financing. Grubb & Ellis claimed $150 million in assets and $167 million in liabilities in its Feb. 20 bankruptcy filing. According to a Wall Street Journal article, a hearing to approve the sale to BGC Partners is scheduled for Thursday.

Grubb & Ellis had said that the offer from BGC Partners is the "sole reason why a going-concern sales process is possible," and came after nearly a year of soliciting 50 companies and one failed exclusivity agreement.

"Simply put, absent BGC's efforts and capital, the debtors would likely have already been forced to liquidate, resulting in the loss of over 3,000 jobs and placing its valued management clients' properties in jeopardy," Grubb & Ellis said in court papers.

For more news and information visit Blumberg Capital Partners.

PWC Survey Results: CRE Market Picking Up

PricewaterhouseCoopers' first-quarter report, which surveyed U.S. real estate investor confidence, shows that the commercial real estate sector is expected to remain in recovery mode in 2012, but added that the market for distribution and industrial real estate will likely become one of the hottest CRE sectors between 2013 and 2015. According to a Wall Street Journal report, real estate executives who responded to the survey said they expect investor interest in those properties to grow with an expansion of the economy and consumer spending.

The retail outlook, however, is a little more bleak. "There's been a total paradigm shift in retail,"Mitch Roschelle, who heads PwC's real estate advisory practice. "Big box stores are being replaced from the consumer's perspective by online shopping…and too many retailers are competing with each other's sticks and bricks stores."

Nationally, more buyers are considering the rebounding industrial sector, as it demonstrates positive signs of recovery, reported the South Florida Business Journal. Warehouse demand is increasing rapidly, especially in coastal markets with international port access, according to the report.

For more news and information visit Blumberg Capital Partners.

Brookfield, Hillwood Form $1B Industrial JV

Brookfield Asset Management announced this week that it had formed a joint venture with Hillwood to acquire, develop and manage industrial property, principally large warehouses, across the United States. With an equity commitment of $400 million, the partnership is expected to deploy up to $1 billion within the first three years.

"The partnership between Brookfield and Hillwood is not only the right fit, it’s happening at the right time," said Ross Perot, Jr., Chairman, Hillwood. "Industrial development slowed during the downturn due to a lack of equity and debt. Given the liquidity and resources supporting our investment, our joint venture is well-positioned to benefit from renewed demand for industrial space which will increase as the economy continues to show signs of improvement."

Overall, the fund is targeting returns in the 13 percent to 16 percent range reported the National Real Estate Investor. The average investment size will be between $20 million and $60 million. And David Arthur, Managing Partner at Brookfield Asset Management, expects the fund will hold assets three to five years after repositioning them.

"As long-term, value-oriented real estate investors, we believe this is an excellent time to selectively build a portfolio of high-quality industrial properties, and we look forward to expanding our relationship with Hillwood," said Arthur. "This initiative expands the scope of our real estate platform in an exciting asset class, strengthening our global property operations in line with the expected launch later this year of our flagship property vehicle, Brookfield Property Partners."

For more news and information visit Blumberg Capital Partners.

DivcoWest Grabs Cambridge Office for $79M

DivcoWest Fund III successfully acquired the Davenport, a four-story Cambridge office building listed on the National Register of Historic Places, for $79 million, or about $357 per square foot, according to a Boston Business Journal article. Robert E. Griffin, Jr., Edward C. Maher, Jr. and David J. Pergola of Cushman & Wakefield's Capital Markets Group, along with Debra Gould and Juliette Reiter of Cushman & Wakefield, represented the seller and procured the buyer.

The historic structure at 25 First St. in the Kendall Square/East Cambridge area was originally built in 1860 and converted into office space in 1987. In 2008, challenged by low occupancy, the owners hired Sasaki Associates to reimagine the space which included renovations to common spaces and the lobby, and the inclusion of lockers, showers and bike storage. The property was 95% leased at the time of sale with major tenants including HubSpot, Sonos, Zipcar and Atlas Venture.

For more news and information visit Blumberg Capital Partners.

Rockrose Acquires DC Building for $120M

Rockrose Development Corporation completed the acquisition this month of 1776 Eye St. NW in Washington, DC, from Dweck Properties for nearly $119.69 million, or $533 per square foot, according to a CoStar report. The seller was represented by Gerry Trainer of Transwestern. Craig Deitelzweig, head of Rockrose's office division, represented Rockrose in-house.

Rockrose announced in November of last year that it was under contract to purchase the property as part of a strategic plan for Rockrose to expand its office portfolio in D.C. and New York. Henry Elghanayan, Rockrose CEO, said at the time that "Plans are already underway to provide a two-story glass entrance to the building, a dramatic new lobby infused with art work, renovated restrooms, common areas, new building systems, an expanded and reformulated rooftop terrace and a new fitness center. Essentially, after our major renovations 1776 Eye Street will be a brand new building."

The building was reportedly 90% leased at the time of sale with major tenants including Gavi Alliance, Carr Properties and Japan International Cooperation Agency. Rockrose has engaged the architecture firm Leo A. Daly to transform the building and has appointed Cassidy Turley as exclusive leasing agents for the property.

For more news and information visit Blumberg Capital Partners.

100 Federal Street in Boston Sold for $615M

Boston Properties Inc. announced this week that it had completed the acquisition of 100 Federal Street in Boston, MA for $615 million from an affiliate of Bank of America, N.A. Despite the sale, according to a Boston Business Journal article, the bank's Boston headquarters will remain at 100 Federal. The lender has signed a long-term lease for 787,000 square feet of space.

100 Federal Street is a 37-story, 1,305,000 square foot Class A office tower located in the heart of Boston's Financial District and was reportedly 93% leased at the time of sale. Situated on Federal Street and bounded by Franklin, Congress and Matthews Streets, 100 Federal Street occupies an entire two-acre city block. Designed by Campbell, Aldrich & Nulty, the tower features an expansive window line that affords breathtaking panoramic views of the Financial District, the waterfront and Boston Harbor, the Charles River and the Cambridge skyline.

For more news and information visit Blumberg Capital Partners.

Digital Realty Buys $123M Dallas Office Park

Digital Realty Trust purchased an 819,000 square foot operating data center and office campus in Lewisville, Texas, a Dallas suburb, for $123 million. According to a CoStar report, Brookfield Real Estate Opportunity Fund I sold Convergence Office Center, which is about 40 minutes north of Dallas. The campus covers over 168 acres, which includes ten buildings and 39 acres of land for future development. At the time of sale, the property was leased as data center space to three tenants, representing approximately 36% of total revenue for the property, with the balance of space leased as office and office/lab space with major tenants including

"This acquisition will immediately contribute stabilized cash flow to our portfolio from the existing long-term leases, while providing a wide range of future development and potential redevelopment opportunities," said Michael F. Foust, Chief Executive Officer of Digital Realty. "Dallas continues to be a very strong market for us. When combined with Datacenter Park Dallas in Richardson, located approximately 25 miles from this site, we believe that we will be able to accommodate a large majority of the data center requirements from customers seeking space in the Dallas market."

For more news and information visit Blumberg Capital Partners.

Plans Approved for College Park Office Campus

Corporate Office Properties Trust (COPT) submitted a plan that was approved this month by the Prince George's County Planning Board to build a three office building campus in College Park, MD. According to a Washington Business Journal article, the transit-oriented plan includes 450,000 square feet of office space and a 160,500-square-foot parking garage. COPT is developing the 13.4-acre, state-owned property in partnership with the University of Maryland which sits adjacent to the Kenilworth Avenue development site. The completed complex will total about 750,000 square feet of office space spread across eight buildings.

PG County Board members urged further efforts to limit traffic and discourage commuters from depending on the parking garage, which will not be constructed until the last building is completed in the third and final phase of development. Lawyer Thomas H. Haller, representing the joint development, said additional traffic management efforts are possible, but he noted that they could be beyond COPT's ability to pay for them.

"The burden literally falls on the state and the University of Maryland," he said.

For more news and information visit Blumberg Capital Partners.

MRC Acquires $29M Loan Portfolio

Madison Realty Capital (MRC), a commercial real estate investment fund, announced this week that it had acquired a 15-note portfolio from a regional savings bank with an aggregate principal balance of approximately $28.7 million. The loan portfolio, consisting of 15 notes throughout New York City, is secured by 11 properties in Manhattan and 14 in Brooklyn, comprised of 245 residential units and 12 commercial spaces, and originated between 2006 and 2009.

"This transaction supports MRC's strategy of acquiring non-performing and sub-performing loan portfolios and then applying our vertically integrated platform, which includes servicing, property management and asset management, to maximize the underlying value of the assets," said Joshua Zegen, Co-Founder and Managing Principal of MRC.

"The credit crunch has raised the bar for everyone," Zegen told GlobeSt.com in 2008. "We are seeing more opportunity. That is the nice thing about the bridge market—you can underwrite according to what is happening in the market on that day." He added, "We are seeing more transaction volume than ever before, because we are one of the few players active in the marketplace right now."

For more news and information visit Blumberg Capital Partners.

Thompson National Buys Arlington Center

TNP Strategic Retail Trust, Inc., a public non-traded REIT affiliate of Thompson National Properties that invests in grocery and drug-store anchored, multi-tenant necessity retail properties and other real estate-related assets, announced this week that it had acquired Ensenada Square in Arlington, TX for $5.2 million. According to a Dallas Business Journal article, TNP represented itself in the deal while Brandon Beeson of EDGE Realty Capital Markets represented the seller, Coastal Equities.

"We believe the Arlington market is well-positioned for growth. Ensenada Square is located approximately one mile away from our last acquisition for TNP Strategic Retail Trust, Woodland West Marketplace in Arlington," said Thompson National Properties' senior vice president, acquisitions, Steve Corea. "Ensenada Square benefits from the close proximity to the University of Texas at Arlington with 34,000 students, the Dallas Cowboys Stadium, the Texas Rangers Ballpark at Arlington, Hurricane Harbor and Six Flags Over Texas."

Located at at 301 S. Bowen Road, the 62,676-square-foot center was originally built in 1976 and renovated in 2005. The center, which was reportedly 93% leased at the time of sale, is anchored by Kroger with other tenants including Family Dollar and Fort Worth Community Credit Union.

For more news and information visit Blumberg Capital Partners.

$1.3M SYNNEX Renovation Completed

River Drive Construction announced this week that it had completed renovations on a 600,000-square-foot distribution center for SYNNEX Corp., a logistics and supply chain management company, in South Brunswick, NJ, part of the New Jersey Turnpike Exit 8A area. River Drive Construction served as general contractor for the $1.3 million project that included warehouse restroom upgrades, new lighting and the addition of 8,000 square feet of office and cafe space. KSS Architects served as architect for the project, which began in September 2011. The building is owned by Atlantic Realty of New Jersey, a privately held real estate development company.

"We're thrilled to announce the completion of the SYNNEX project," said Joseph Langan, President of River Drive Construction in a Paramus Post article. "As a result of our breadth of knowledge in the industrial space and our close relationships with South Brunswick municipal officials, we were able to complete this high security, fast-tracked project on time and on budget. The completion of this project is another notch on our belt at Exit 8A."

For more news and information visit Blumberg Capital Partners.

$17.5M in Financing Arranged for Texas Property

Sonnenblick-Eichner Company, a Los Angeles-based real estate investment banking firm, announced this week that it had arranged $17,500,000 of first mortgage financing for the DoubleTree by Hilton Hotel Dallas-Campbell Centre. Funded by a private real estate debt fund, the new 5-year facility is LIBOR-based, and non-recourse to the borrower.

David Sonnenblick, a Principal of Sonnenblick-Eichner Company, said of the deal, "This financing provided the ownership the ability to recapitalize their existing debt, as well as provide for prepayment flexibility to allow them to execute their business plan for the hotel over the next three to five years."

"We were able to obtain multiple financing quotes demonstrating that there is liquidity in the capital markets for hotels with in-place cash flow," added Elliot Eichner, also a principal of Sonnenblick-Eichner Company.

The 20-story, 300-room hotel is located within Campbell Centre, a mixed-use office and commercial property complex comprised of the hotel and two 20-story office buildings totaling approximately 875,000 square feet. The property is located across the North Central Expressway from NorthPark Center, Dallas' premier 2 million square-foot super regional shopping mall anchored by Neiman Marcus, Nordstrom, Barney's New York, Dillard's and Macy's.

For more news and information visit Blumberg Capital Partners.

UBS Buys $74M N. Hollywood Property

Kennedy Wilson, an international real estate investment and services firm, announced this month that it had sold NoHo-14 to a core fund managed by UBS for $73.9 million, or $419,583 per unit. According to a CoStar report, Kennedy originally acquired the 180-unit mixed-use tower in 2010 in a joint venture led by Kennedy and including Guardian Life Insurance and Urban Partners/RECP. The JV assumed the $40 million Cigna fixed rate financing in the transaction.

"Investors, especially for something this large, do a lot of forecasting and research on where the economy is going. This is a really solid signal that they think the recovery is coming sooner rather than later," said economist William W. Roberts, director of the San Fernando Valley Economic Research Center at CSUN, in an LA Daily News article. "NoHo-14 is just one of Kennedy Wilson's ventures with Guardian Life and is an excellent example of our commitment to investing and creating value in multifamily real estate projects together."

"I think the San Fernando Valley, particularly the (areas) close to the job centers are desirable. It really is competing with the best areas of downtown, West Hollywood and the Westside," added Robert Hart, president of Kennedy Wilson's Multifamily Management Group.

As reported by CoStar, the 14-story luxury apartment building was originally built as a condominium project in 2008. After the partnership purchased the property in 2010, the group converted it into multifamily units. The development, which includes 11,000 square feet of ground floor retail space, is now fully leased.

For more news and information visit Blumberg Capital Partners.

Synergy Business Park Sold for $62.8M

Boyle Investment Company announced this week that it had acquired Synergy Business Park in Brentwood, TN for $62.8 million. The Nashville Business Journal reported that Boyle bought the complex from Brentwood-based ProVenture Commercial Real Estate and Philadelphia-based Urdang Capital Management; the partnership originally paid $56 million for the property in 2006. Terms of the deal were not disclosed.

"We were happy with the investment and happy with the exit strategy," said John Keller, senior vice president of ProVenture. "I think Boyle will do a fine job with it in the future."

Built in the 1980s, the Synergy Business Park campus sits on 33 acres of land and covers eight office buildings with roughly 500,000 square feet of space. According to Cassidy Turley's latest report, the occupancy rate was 95.4% in the fourth quarter of 2011, with major tenants including Ozburn-Hessey Logistics and the architectural firm Hart Freeland Roberts.

For more news and information visit Blumberg Capital Partners.