Asian Investors Making Moves in US CRE Markets

A new article from the Wall Street Journal titled Asian Investors Dig Into U.S. Property takes a look at the impact foreign investors are having on real estate development in the United States. Equity investments in the U.S. from Singapore, South Korea and China are already at all-time highs this year, for a combined total of $5.2 billion through mid-June, according to data from Real Capital Analytics. An excerpt from the article with investment information follows:

Singapore, the No. 1 Asian investor in U.S. property this year, has invested about $1.9 billion as of mid-June. That is more than the cumulative total that the city-state has invested in the U.S. over the past decade, Real Capital data show.

Singapore's recent deals include the Government of Singapore Investment Corp.'s acquisition of an office building in San Francisco's Financial District. GIC also bought a resort in Maui and four other hotels from hedge-fund manager John Paulson's real-estate fund. In June, Singapore property investor Overseas Union Enterprise completed its purchase of U.S. Bank Tower in Los Angeles, the tallest building in California, for $367.5 million.

China has invested more than $1.5 billion in 2013, compared with $300 million in 2012, according to Real Capital. Last year, the China Insurance Regulatory Commission paved the way for more deals by relaxing the rules for some big insurers to invest in certain types of overseas property.

Meantime, numerous South Korean investors are shopping in the U.S. For example, Mirae Asset Global Investments Co. recently agreed to pay $218 million to acquire an office tower on Chicago's West Wacker Drive.

South Korea pension funds, flush with contributions from an aging population, increasingly have been looking for property outside the domestic market. Representatives of country's National Pension System are making the rounds in New York, looking to invest a mimimum $100 million in office buildings, hotels or shopping malls, commercial real-estate brokers say.

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CRE Fundamentals Continuing Recovery

New analysis from the CoStar Commercial Repeat Sales Index (CCRSI) released this month shows that prices in the commercial real estate market have recovered more rapidly than transaction activity, suggesting that investors are focusing on the most attractive deals. According to the data, investment transaction activity has progressed much like the overall economy, showing steady but painfully slow improvement. The data suggests that uneven liquidity remains an important force to be reckoned with among the myriad adverse factors weighing on CRE value recovery, especially for non-institutional-grade properties or assets in non-prime markets.

"For some time now, there’s been a significant imbalance between the amount of capital chasing real estate deals and the available supply of reasonable, institutional-quality deals," said Michael Zietsman, managing director and regional head of the Southwestern Capital Markets Group for Jones Lang LaSalle. "If there were more supply, there would be much larger transaction volume. The primary markets and product types have fully recovered, but investors want high-quality real estate. That’s been our biggest challenge."

For more news and information visit Blumberg Capital Partners.

Lakeway Center Office Complex in New Orleans Sold

Equity Office Properties closed on the sale of Lakeway Center in the greater New Orleans area this month. The three buildings on Causeway Boulevard were purchased by the Feil Organization for an undisclosed price, according to HFF, the commercial real estate services firm that closed the sale.

"We are very pleased to close the acquisition of Lakeway Center. It is an outstanding property, which is an ideal complement to our nearby Lakeside Shopping Center. This transaction builds on our nearly 40-year track record of investment and job creation in the greater New Orleans community. We plan to continue to maintain and upgrade Lakeway Center to ensure it remains a top-tier office destination," stated Jeffrey Feil, chief executive officer of the Feil Organization.

Built in 1987, the Class A office complex, which includes a 34-story building, totals 1.22 million square feet. Equity Office Properties had owned the complex since 2007, according to a Times-Picayune article. The property was over 90% leased at the time of sale, with major tenants including People's Health Network, the U.S. Drug Enforcement Administration, Fresenius Medical Care and EDG engineering consultants.

For more news and information visit Blumberg Capital Partners.

Highwoods Buys One Alliance Center in Atlanta for $143.4M

Raleigh-based Highwoods Properties, a publicly traded REIT, announced today that it had purchased One Alliance Center in Atlanta for $143.4 million, or $259 per square foot. The acquisition means that the company now owns both One and Two Alliance Center, having acquired Two Alliance Center last September for $146.7 million from Tishman Speyer. Dallas-based mortgage servicer ORIX Capital Markets sold One Alliance Center in a deal marketed by CBRE. In March, previous owner Tishman Speyer negotiated the transfer of ownership in One Alliance to ORIX, according to an Atlanta Business Chronicle article.

"The acquisition of One Alliance more than doubles our presence in Buckhead where we now wholly-own over one million square feet of contiguous Class A office space," said Ed Fritsch, president and chief executive officer of Highwoods. "This is a rapidly tightening submarket and we forecast leasing at One Alliance to exceed 93% within three years. In addition, we see opportunities to 'Highwoodtize' the property and expect to garner operating and leasing synergies by owning both Alliance Center towers through shared parking, shared amenities, shared vendor agreements and customer expansions to name a few."

The 20-story One Alliance building was 67% leased at the time of sale. Both towers stand over Georgia 400, an artery for intown office workers to the Atlanta suburbs, and across from Phipps Plaza, a ritzy mall owned by Simon Property Group.

For more news and information visit Blumberg Capital Partners.

The Brill Building Sold for $185.5M

Real estate investor Eric Hadar of Allied Partners, along with the private equity firm Brickman, have taken ownership of the iconic Brill Building in New York at a purchase price of $185.5 million, or about $1,100 per square foot. Barry Sternlicht's Starwood Property Trust provided a $158.5 million first mortgage to help finance the transaction, while Square Mile Capital Management provided $40 million of financing. Adam Spies and Doug Harmon of Eastdil Secured brokered the sale.

"We are excited to be involved in a project that will help modernize one of Times Square's most famous and storied buildings," said Boyd Fellows, President and Director of Starwood Property Trust. "This transaction is a prime example of our unique ability to act as a one-stop-shop to provide large, highly specialized loans that meet the needs of high-quality sponsors like Allied Partners and Brickman."

The Brill Building was 27% occupied at the time of sale, but the new owners have plans to begin extensive renovations expected to retain the landmark building's heritage and aesthetic while modernizing infrastructure. The new space, opening in 2014 will house the Songwriters Hall of Fame among other tenants including fashion, arts, media, entertainment and other creative office users, according to a CoStar report. Moving forward, retail leasing will be managed by Jeffrey Roseman of Newmark Grubb Knight Frank with commercial leasing run by Paul Kotcher of Brickman.

For more news and information visit Blumberg Capital Partners.

America Center Up for Sale

Legacy Partners, a vertically integrated real estate investment firm, announced this week that it had retained HFF and Cornish & Carey Commercial Newmark Knight Frank to spearhead the sale of the entire America Center project in Santa Clara, California. The offer for sale includes the two 213,000-square-foot, six-story buildings and roughly 13 acres of adjacent land that is envisioned for two additional 213,000-square-foot buildings. According to a Silicon Valley Business Journal article, several real estate sources indicated the property could trade for significantly north of $400 per square foot, based on the built space; a range of $400 to $500 a foot would pencil to $170 million to $213 million.

"America Center was conceived and constructed as an environmentally advanced office campus that reflects a growing demand for a sustainable land use policy and modern workplace environments in Northern California, Silicon Valley and indeed the nation," said Derrick How, Vice President of Acquisitions and Development for Legacy Partners Commercial, in a 2010 article shortly after Legacy Partners updated the property. "This project required us to work with the most current techniques in design, construction and remediation, an investment we hope serves as a ready inspiration for our corporate tenants seeking to further elevate the Bay Area’s commitment to long-term sustainability and continued progress in the adoption of clean technologies and green infrastructure."

Construction of the America Center began in June 2000 after Legacy Partners acquired more than 60 acres at Highway 237 and Great America Parkway from Cargill Salt. In 2007, HKS Architects were commissioned by Legacy Partners to expand and update the property with an advanced and modern mindset. America Center was shell complete in July 2009 and soon became San Jose's first LEED Gold-certified speculative office development built on a fully restored brownfield.

For more news and information visit Blumberg Capital Partners.

Princeton Holdings Sells Interest in Manhattan Office Portfolio for $74M

Princeton Holdings LLC, a leading real estate investment and finance firm, announced this week that it had sold its interest in a one million square-foot office portfolio in Manhattan's Midtown South submarket for $74 million. According to a Wall Street Journal report, the buyer was Extell Development, a major New York City real estate development and investment firm. Terms of the deal were not disclosed, though it is known that a joint venture led by Princeton bought a 25% stake in the portfolio, (known as the 'Ring portfolio') controlled by F.M. Ring Associates, in 2011 with a deposit of $10 million.

"Our investment philosophy at Princeton Holdings can best be defined as long-term with the ability to seize upon near-term exit opportunities if they are too attractive to resist," said Joseph Tabak, CEO of Princeton Holdings. "Back in 2011, we engaged in a process that will now unfold over the coming years without our involvement. While we are pleased with the outcome here, it's clear that the portfolio will ultimately yield many rewards for those who have the fortitude to 'crack the code' here. As we have done before, we will re-invest the proceeds from this lucrative deal back into our core business of real estate investment and development."

The portfolio includes 14 commercial office buildings, among them 212 Fifth Avenue and 251 Park Avenue South. Market estimates peg the value of the entire Ring portfolio at roughly $400 million to $500 million.

For more news and information visit Blumberg Capital Partners.

Seventh Street Developing 1.5M SF Industrial Park

In what will be the largest warehouse built in the San Gabriel Valley in the last three years, Seventh Street Development announced that it has begun construction on a new 1.5 million square-foot industrial park as part of the Mission 71 Business Park's third phase of development. In April 2012, Seventh Street purchased an additional 11.3 acre parcel from the US Government and has processed plans for development of a 245,000 square foot state-of-the-art warehouse and manufacturing building with 32 foot clear height, ESFR sprinkler system, 41 dock-high loading positions and signature signage on Mission Boulevard. Construction is expected to be completed by year-end.

"No new construction in the past three years has created a significant lack of product, making the San Gabriel Valley industrial market one of the tightest markets in the entire L.A. region," broker Lynn Knox of CBRE said. Kittrich Corp. – which also manufactures pens, highlighters and other school supplies – will make the new 240,000-square-foot building its headquarters when it relocates from La Mirada by the end of the year, according to a Los Angeles Times article.

"Demand is expected to outpace new supply in the San Gabriel Valley, especially for free-standing buildings like these that are offered for sale as well as lease," said Craig Furniss, principal at Seventh Street Development, in a statement. "There is a negligible amount of new class-A industrial space under construction in this market which makes the timing right to move forward with Phase III."

For more news and information visit Blumberg Capital Partners.

KBS REIT III Closes on $269M Office Portfolio

Marking its largest transaction to date, KBS Real Estate Investment Trust III (KBS REIT III) announced this week that it had closed on the purchase of a $269 million office portfolio in Dallas and Maryland, dubbed the National Office Portfolio. KBS REIT III bought One Washington Center, a 321,007-square-foot building at 9801 Washingtonian Blvd. in Gaithersburg, Maryland, along with two other buildings in Dallas from affiliates of CBRE Global Investors. The sale comes a little more than two years after CBRE bought the building for $90 million, according to a Washington Business Journal article.

"The new National Office Portfolio represents another great addition for KBS REIT III," said KBS REIT III CEO Chuck Schreiber. "These are top-tier office assets in strong markets that have all the attributes KBS REIT III looks for in an investment."

"The Dallas purchases represent a pair of assets in the top-performing submarket of Preston Center in what we believe to be one of the best-performing overall markets in the country," said Ken Robertson, senior VP and asset manager of KBS Capital Advisors, KBS REIT III's external advisor. "These acquisitions in this amenity- and lifestyle-rich neighborhood fit the mold of what we're looking for. Dallas has a great workforce in a pro-business environment and we are grateful for the opportunity to acquire such a trophy-quality portfolio from CBRE Global."

In Dallas, KBS REIT III acquired Preston Commons, a three-building, Class-A complex with 427,799 rentable square-feet, which covers 6.33 acres with 1,311 parking spaces in a subterranean three-level garage. The other property, Sterling Plaza, is a one-building, Class-A structure designated LEED Silver for sustainability. It has 313,609 rentable square feet with a six-and-one-half level parking structure. Both properties were renovated in 2012.

For more news and information visit Blumberg Capital Partners.

Nike Buys More Office Space for $84.5M

In a deal that expands Nike's global headquarters footprint by nearly 600,000 square feet, the footwear and apparel giant has purchased more buildings around its current headquarters for $84.5 million. Each of the properties was formerly owned by Triple Net Properties LLC, a subsidiary of Grubb & Ellis, according to a Portland Business Journal article. In April 2012, Nike acquired four other office buildings adjacent to its campus in a $44 million deal.

The two new properties, called Woodside I and Woodside II, are located within Beaverton, Oregon city limits southeast of the Southwest Walker Road and Southwest 158th Avenue intersection. "These real estate investments are designed to help support Nike's growth," Nike spokeswoman Mary Remuzzi, in an email to the Journal.

For more news and information visit Blumberg Capital Partners.

SoHo Mixed Use Sold for $81M

Ellwell Associates LLC, established in 1995 and incorporated in New York, sold 375 Broadway in SoHo for $81 million to Real Estate Equities Corporation. The 55,000 square-foot building was purchased by Real Estate Equities, headed by father and son Michael and Brandon Miller and Mark Siegel, in partnership with the overseas investor accessed by The Carlton Group. The seller was represented by Lee Spiegelman, founder and managing principal of SplitRock Group, in the transaction; Laurence Ross, managing principal of Highcap Group, represented the buyer.

The five-story office and retail building at 375-377 W. Broadway in New York City between Broome and Spring Streets was owned by Ellwell Associates for decades. Currently, apparel retailer Anthropologie leases 11,200 square feet of ground floor retail space, as well as 7,000 square feet in the basement, in a lease that runs through March 2016, paying about $115 per square foot, Steven Fenster, a managing director at financial firm Carlton Advisory Services, said. All the rents in the building are significantly below market, so there is a tremendous amount of upside," Brandon Miller said. "Soho is a great [New York City] submarket, and we are very excited about this investment."

For more news and information visit Blumberg Capital Partners.

Five Columbus Circle Gets $55M Refinance Loan

1790 Broadway Associates, the owners of Five Columbus Circle in New York, NY, has secured a $55 million refinancing loan on the office and retail property. Meridian Capital Group negotiated the senior loan, provided by a national balance sheet lender and featuring a 10-year term with full-term interest-only payments and an interest rate of 3.45%. 1790 Broadway Associates, LLC, an entity controlled by the Ionian Group, run by Sofia Milonas and Claire Milonas, and The Red Apple Group, run by John Catsimatidis.

"There was tremendous liquidity in the market for this transaction given its location and stable operating history," said Meridian Managing Director, Aaron Appel. "The lender won the deal by offering a competitive interest rate and at the same time providing structural flexibility rarely seen in long term fixed rate debt products."

Five Columbus Circle is located at 1790 Broadway and features 8,700 square-feet of street level retail. The property is 96.5% leased, with major tenants including Columbia Artists Management, Columbia University, Fordham University and HSBC in the retail portion.

For more news and information visit Blumberg Capital Partners.

World Class Capital Closes Texas and California CRE Acquisitions

World Class Capital Group (WCCP), an Austin-based private real estate investment firm, announced this week that it had closed on two major commercial real estate acquisitions in Texas and California. The properties include North Oaks Shopping Center, a 450,000 square foot retail center in Houston, Texas, and Andrita Media Center, a 110,000 square foot creative office and studio building in Los Angeles, California.

WCCP purchased the properties for an undisclosed sum from unnamed buyers. It is known, however, that Broadcast Facilities, a media services company led by former Pixar and Fox executive Simon Bax and Bill Tillson, the President of Broadcast Cable Services, Inc., purchased the Andrita Media Center from Playboy Enterprises in April 2008. "Andrita Media Center provided us the opportunity to make a strategic buy on a high-quality asset and enter the Southern California market," said Nate Paul, President and CEO of WCCP.

For more news and information visit Blumberg Capital Partners.

Blumberg Grain in the News

Blumberg Grain was featured in a Ghana Business & Financial Times article titled Blumberg Grain Joins GGC to Improve Grain Storage featuring the company's advancements and partnerships in the developments of the West Africa Manufacturing Plant and Export Hub. An excerpt follos:

As a leader in the industry, Blumberg Grain will provide state-of-the-art food safety and security systems to consolidate efforts of the WRS for increased efficiency in the grain industry through strategically targeted interventions along the grains value chain. The GGC, a non-profit private sector organization funded by the USAID/ADVANCE, established the WRS aimed at helping in the efficient storage and marketing of grains.

Dr. Christian Rath, Senior Vice President of Blumberg Grain, said the company sees its partnership with GGC as an impressive strategy for West Africa — specifically to develop a West Africa Manufacturing Plant and Export Hub to fabricate and distribute their warehousing systems across the region.

Dr. Rath pointed out that Ghana and Nigeria are the finalists for the West Africa Hub location and Blumberg Grain is seeking to reach a selection decision before the end of June.

"If Ghana is selected as the location for the West Africa Manufacturing Plant and Export Hub, it will improve the lives of Ghanaian farmers significantly, create additional employment, increase exports, foster higher education, and help Ghana to become the agribusiness Hub for West Africa," he adds.

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

Starwood Buys Blue Back Square in CT for $106.3M

Starwood Capital Group and affiliate Starwood Retail Partners announced this week that they had purchased a large mixed-use center from a developer joint venture for $106.3 million. Developers Ronus Properties, Street-Works and JDA Development sold the 450,000 square-foot property, dubbed Blue Black Square, after originally delivering the complex in 2008 for $158.8 million.

"Blue Back Square is a fundamentally strong, infill asset in an attractive market with limited new supply that generates strong cash-on-cash returns and presents an excellent opportunity for Starwood and its investors," said Ethan Bing, vice president at Starwood Capital Group.

According to Starwood, the property was 96% leased at the time of sale, with major tenants including REI, Crate & Barrel, The Cheesecake Factory Inc. and Barnes & Noble. The live-work-play complex also includes condos and apartment rentals, medical space that houses the Hartford Hospital, and office space that is taken up by professional services and law firms.

For more news and information visit Blumberg Capital Partners.

Marriott Business Park Sold to JV

The Marriott Business Park, an office/R&D business park totaling 427,500 square feet in Santa Clara, California, traded hands this week as HFF closed the sale of the property. Legacy Partners, in joint venture with AllianceBernstein U.S. Real Estate Partners, purchased the property for an undisclosed amount. Holliday Fenoglio Fowler marketed the property on behalf of the seller, a joint venture composed of two unnamed global investment managers.

"Investors were attracted to the stable in-place occupancy with substantial upside potential from near-term rollover of currently occupied suites, which were leased at rates significantly below-market, allowing the new owner to capitalize on the surging office market," said HFF managing director Steven Golubchik. "Furthermore, the property offered investors increased site density should the new ownership seek redevelopment in the future."

For more news and information visit Blumberg Capital Partners.

Forest City Sells Portfolio Interest for $330M

Creating a joint venture portfolio valued at $2.05 billion, Forest City Enterprises, Inc. announced this week that it had signed an agreement to for joint ventures with QIC to recapitalize a retail portfolio of eight U.S. malls in return for $330 million of liquidity. According to a Cleveland Sun Press article, Forest City confirmed last month that it had hired New York investment bankers to explore sale and joint-venture opportunities for the Avenue shopping mall, the Post Office Plaza building and the Skylight Office Tower. Weeks later the company announced that QIC, one of the largest institutional investment managers in Australia, will acquire 49% of Forest City's current ownership interest in the portfolio for cash. Forest City will be the managing member of the individual joint ventures and continue to be responsible for management of the properties. Closing of the joint ventures is expected to occur before the end of the fiscal third quarter.

"We are pleased to partner with QIC, an experienced global investor, to invest in and enhance these strong retail centers," said David J. LaRue, Forest City president and chief executive officer. "This is another example of our strategy of securing strategic capital partners to invest with us in both existing assets and new opportunities. The transaction clearly demonstrates the tremendous value of these properties. Unlocking a portion of that value allows us to advance our deleveraging efforts while also reinvesting in our portfolio and new development. I want to thank our entire transaction team, led by James Ratner, Duane Bishop and Frank Wuest, as well as everyone involved from QIC, for achieving this great outcome."

Preliminary priorities for the joint venture will be renovation and/or expansion of four malls: Galleria at Sunset in Henderson, Nevada, Antelope Valley Mall in Palmdale, California, Short Pump Town Center in Richmond, Virginia, and South Bay Galleria in Redondo Beach, California. The other properties included in the joint venture are Victoria Gardens in Rancho Cucamonga, California, Charleston Town Center in Charleston, West Virginia, Mall at Robinson near Pittsburgh, Pennsylvania, and Promenade in Temecula, California.

For more news and information visit Blumberg Capital Partners.

RFR Secures $100M Financing for 345 Park Avenue South

RFR Holding GmbH (RFR), a real estate investment firm owned by the RFR Group, announced this week that it had closed on $100 million in financing for 345 Park Avenue South. Through the 10-year CMBS transaction arranged by Citibank, RFR will decease existing debt on the property while taking advantage of low interest rates to reduce its cost of capital going forward, according to a Wall Street Journal report.

"This transaction exemplifies several trends we're seeing in the financing marketplace," said Jason Brown, Head of Acquisitions for RFR. "With strong sponsors like RFR, lenders are now willing to extend the term of the financing beyond the terms of existing leases. There's an understanding that groups with a track record of retaining and attracting tenants are likely to maintain stable performance in the future."

345 Park Avenue sits on a full city block with the front on Park Avenue, the back on Lexington Avenue, between 51st and 52nd Streets in New York. Completed in 1969, the skyscraper stands 634 feet tall and and has 44 floors. Emery Roth & Sons designed the building, which is the 64th tallest in New York. The office floors are 100% occupied by Digitas, a leading digital marketing firm owned by international advertising and public relations company Publicis Groupe.

For more news and information visit Blumberg Capital Partners.