WRE Completes Sale of MD Office Portfolio for $111.5M

DC-based Washington REIT confirmed that it has completed the previously announced sale of a suburban Maryland office portfolio for aggregate sales proceeds of $111.5 million. Brookfield Property Partners has acquired the portfolio, which includes the Wayne Plaza and 600 Jefferson Plaza as well as 6110 Executive Boulevard and West Gude Drive. Washington REIT was represented by Cushman & Wakefield in the deal; Brookfield's agents were not disclosed, nor were terms of the sale. The company indicated earlier this year that it planned to unload its Maryland office assets as part of a capital allocation strategy; Washington REIT's two remaining buildings in the area are also under contract to be sold, expecting to close in the third quarter.

"We have successfully executed the first tranche of this previously announced strategic milestone," said Paul McDermott, President and Chief Executive Officer of Washington REIT. "The sale is a part of our recent capital allocation out of low-barrier suburban office and into value-add, urban in-fill, multifamily with higher growth potential, lower leasing capital requirements and greater cash-flow stability."

"This sale is part of Washington REIT's ongoing migration out of suburban offices and into more urban assets," added Paul Collins, Cushman & Wakefield Vice Chairman. "The heavily multi-tenanted nature of these assets along with the repositioning opportunity is an ideal fit for Brookfield, which has an excellent track record with these types of assets."

6110 Executive Boulevard in Rockville is a 10 story, 218,144 square foot office building originally constructed in 1970 and awarded an Energy Star label in 2015 for its operating efficiency. West Gude Drive in Shady Grove at 20, 30, 40, and 50 West Gude Drive offers 288,491 square feet of space in close proximity to Shady Grove metro station, I-270 and new InterCounty Connector (ICC). Wayne Plaza in Silver Spring is a 9 story office building with over 99,000 square feet of space. 600 Jefferson Plaza in Rockville was built in 1985 with 113,035 square feet of space over five floors. The portfolio was 90% leased at the time of sale, with major tenants including Comcast, George Washington University, State of Maryland, Montgomery County, Federal Realty Investment Trust, Henry M. Jackson Foundation, KAI Research, Inc., Research Triangle Institute and Lockheed Martin.

For more news and information visit Blumberg Partners.

Maryland Office Portfolio Trades for $240M

Rockville, Maryland-based Washington Real Estate Investment Trust (WRE) announced that it has sold all six of its suburban Maryland office properties for $240 million in two separate contracts to an affiliate of Brookfield Property Partners. The REIT retained Cushman & Wakefield to market its suburban portfolio holdings at the beginning of the year, shifting its focus to urban, Metro-accessible sites in Greater Washington. In a press release on Q1 financials, WRE said it expects the transactions to close in Q2 and Q3 of 2016, and that it is also under contract to sell a parcel of land at Dulles Station in nearby Herndon, Virginia.

Properties in the portfolio include:

6110 Executive Boulevard, 10-story 202,000 square foot office building in Rockville

One Central Plaza at 11300 Rockville Pike, a 267,000 square foot 13-story office building (acquired by WRE for $44M in 2001)

600 Jefferson Plaza in Rockville at 5 stories tall with 113,000 square feet of space

The West Gude Drive complex at 20, 30, 40, 50 West Gude Drive, 277,000 square feet over 5 stories

The 21-story 51 Monroe Street office building with 223,000 square feet of space

and Wayne Plaza at 962 Wayne Avenue in Silver Spring with 99,000 square feet over 9 floors

Washington REIT CEO Paul McDermott had said during the October 2015 earnings call that the properties had significant upside for buyers willing to invest in them. West Gude, for example, is "definitely a sales candidate that has opportunity to it," while "600 Jefferson would probably be another opportunity for someone else to improve and allocate capital to, same with Wayne Plaza." Earlier this month, WRE placed a nine-story, fully leased office building on the market that serves global headquarters for Booz Allen Hamilton and is near the Greensboro Metro Station in Tysons Corner, Virginia.

For more news and information visit Blumberg Partners.

Qatar and Brookfield Buying Canary Wharf

Brookfield Property Partners announced this week that its has entered into a 50/50 joint venture with Qatar Investment Authority to acquire the outstanding ordinary shares of Songbird Estates, which owns approximately 69% of Canary Wharf Group. If the offer is approved by Songbird Estates shareholders, the JV will make an offer to acquire the 31% of the outstanding shares of London's Canary Wharf not already owned by Songbird to take full ownership of the East London skyscraper cluster Canary Wharf, one of the world’s leading financial districts. Songbird Estates said it expects its biggest shareholders will accept an offer from Qatar Investment Authority and Brookfield Property Partners it had previously urged them to reject. Songbird said it still thought the $4 billion (3 billion pounds) price undervalued the estate, but with no rival bid forthcoming and holders of 86% of the shares backing the deal, it said its minority investors should accept.

Ric Clark, CEO of Brookfield Property Group, stated, "The placement of $1.8 billion of equity is a great endorsement of our global premier asset strategy. We are on the path to building the world's leading portfolio of best-in-class property assets. This capital will enable us to launch BPY to the next phase."

Qatar Investment Authority said in a statement, "We are making this strategic investment in Brookfield Property Partners as part of our investment plan to diversify globally in the real estate sector. This transaction takes our existing institutional relationship with Brookfield Asset Management to the next level, establishing a global platform for us to ‎continue our collaboration with Brookfield."

The main tower in Canary Wharf — a major office development begun in the 1980s by Toronto-based Olympia & York — is home to some of the world's biggest banks. Companies including Barclays Plc, HSBC Holdings Plc, Citigroup Inc., Morgan Stanley and JPMorgan Chase & Co. have offices in the district, best known for the 50-story tower at One Canada Square, the U.K.’s tallest building until the Shard was completed in 2010.

For more news and information visit Blumberg Capital Partners.

Cushman & Wakefield Buy Massey Knakal for $100M

In the bidding tournament to acquire Massey Knakal Realty Services, Cushman & Wakefield won out and has agreed to pay about $100 million to acquire New York's No. 1 Investment Sales firm (based on transaction volume) for more than a decade. The deal is expected to be completed by year's end; Cushman & Wakefield was advised in the acquisition process by Goldman, Sachs & Co. while Massey Knakal was advised by Perella Weinberg Partners.

Founded in 1988 by Paul Massey Jr. and Robert Knakal, Massey Knakal has closed more than 5,000 transactions in the New York area with a market value in excess of $21 billion. Earlier this year, the firm retained Perella Weinberg Partners to shop a minority stake or the entire firm to potential buyers, according to various media reports. In addition to Cushman, CBRE and DTZ were reported to be interested in the firm, according to a CoStar article.

"From the outside looking in, this is a great fit and opportunity for both firms to continue to grow and provide their clients with an added level of expertise on a global platform," said Ric Clark, Chief Executive Officer of Brookfield Property Partners and a member of Massey Knakal's Board of Advisors. "Paul and Bob are strong leaders joining a strong brand in Cushman & Wakefield, which resonates in the industry all over the world. I expect to see great things from this collaboration in the years ahead."

For more news and information visit Blumberg Capital Partners.

IDI, Verde Realty Merge in $1.1B Deal

IDI, one of the largest privately-held real estate property companies in North America focused on industrial properties, announced this week that it had successfully merged with Verde Realty in a transaction worth $1.1 billion. Verde Realty, an existing majority-owned real estate holding of Brookfield Property Partners, will fold into and operate under the IDI name, which will remain headquartered in Atlanta, Georgia. The new IDI has assets valued at more than $2 billion, with a portfolio of nearly 180 buildings with 45 million in square footage.

"By combining our operations with Verde, IDI is positioned to build upon and strengthen the brand we have built over the past 24 years," said Tim Gunter, president and CEO of IDI. "Our collective goal for the 'new IDI' is to develop the highest quality North American industrial platform while remaining true to our mission – to build real long-term value for our clients, team members, communities and industry by striving for superior quality in all we do." He added, "We will continue to grow the company through development of inventory buildings while still serving build-to-suit clients. By combining our assets and expertise, our footprint becomes broader, our asset base and balance sheet stronger, and we are better able to pursue acquisition of product."

GlobeSt.com reported in August that Brookfield Property Partners, headquartered in Hamilton, Bermuda, was acquiring IDI from the US subsidiary of Kajima Corp. Brookfield Property Partners bought about 25% of IDI, which was founded in 1989; its partners acquired the balance of the company.

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.