CalPERS Closes on $1.9B NYC Office Tower

California pension fund CalPERS has completed the acquisition of a 54-story Manhattan office building for $1.9 billion, according to documents filed with the New York City Department of Finance. The building at 787 Seventh Avenue was sold by AXA Financial, which originally acquired the building for $1.1 billion in June 2009. CalPERS acquired the office tower between West 51st and West 52nd Streets in part with a $780M first mortgage extended by Deutsche Bank, according to a Biznow article. Terms of the deal and representation were not disclosed; AXA originally announced it would put the property on the market in August 2015.

According to a Sacramento Bee article, the deal represents one of the priciest real estate investments CalPERS has ever made, and one of the largest deals in New York history. "The acquisition follows our real estate strategic plan to invest in core, income generating properties," said CalPERS spokesman Joe DeAnda in an email. The deal amounts to 7 percent of CalPERS' real estate portfolio, it reported. Major tenants of the building, currently known as the AXA Equitable Center, include Sidley Austin, UBS, BNP Paribas, and a Pret A Manger location that operates out of the ground floor.

For more news and information visit Blumberg Partners.

Blackstone to Transform Cosmopolitan of Las Vegas

In a new Wall Street Journal article titled Blackstone Looks to Buck the Odds on Vegas Strip, Craig Karmin examine's the company's move to turn around the Cosmopolitan Hotel-Casino in Las Vegas. An excerpt follows:

At the Cosmopolitan of Las Vegas, the top four floors of the hotel's 52-story east tower offer some of the Strip's prime real estate. Views from the wraparound balconies stretch for miles, and ceilings soar up to 16 feet. Yet these rooms sit unfinished and have never been occupied by guests.

Now, Blackstone Group LP plans to transform that space into grand suites in hopes of attracting high rollers from around the world who have largely ignored the property's underperforming casino thus far. The New York investment firm bought the hotel and casino property for $1.73 billion in December from Deutsche Bank AG.

The makeover is part of Blackstone's vision for turning around the Cosmopolitan, which has been one of the biggest real estate busts of all time. Deutsche Bank, which took control of the property in 2008 after the original owner defaulted, spent about $4 billion on the project before unloading it.

Blackstone executives said they expect to spend up to $200 million on the property, in part by completing elements of Deutsche Bank's aborted plan. In addition to the top-floor suites, Blackstone has ideas for new VIP rooms in the casino areas and is looking to add new bars and restaurants in vacant space on the first three floors.

For more news and information visit Blumberg Capital Partners.

US Impacts European CMBS Rebound

A new article from the Wall Street Journal titled CMBS Make a Comeback in Europe examines how the commercial mortgage-backed securities market recovery in the United States is having an impact on the European market as some of the biggest US originators are ramping up European deals. While deal volume is still below pre-crisis levels, there have been seven new European CMBS issues this year worth €2.57 billion ($3.2 billion), according to data firm Trepp LLC, compared with €47.3 billion in the peak year of 2006. An excerpt follows:

In Europe, after a limited number of deals in 2012, the CMBS market slowly restarted in 2013, but was dominated by refinancing of multifamily portfolios. Last year, about €7.2 billion of CMBS was issued, but almost all of that was from the refinancing of three large German residential portfolios, according to Trepp.

"The predominance of German multifamily in new securitization at the beginning of 2013 was significant," said Patrizia Pirinoli, CMBS analyst at Goldstar Research Ltd. Most issues, she added "stemmed also from previous securitizations."

The recovery of Europe's CMBS market is partly due to work by a trade organization, the Commercial Real Estate Finance Council, which issued new guidelines for the securities in Europe, so-called CMBS 2.0. The guidelines are meant to guarantee to investors "more transparency, more access to the underlying documents," said Charles Roberts, a partner at Paul Hastings.

Many of the deals this year have been more complex than simple refinancing. Some have provided debt to borrowers to finance new acquisitions and others involved multiple loans. For example, Goldman Sachs completed two CMBS originations backed by loans on Italian portfolios owned respectively by Blackstone Group and Morgan Stanley.

Deutsche Bank has been a leading player in Europe this year. For example, in October, together with Crédit Agricole CIB, it sold a £750 million ($1.18 billion) CMBS issue to refinance the Westfield Stratford City shopping center in London. This year, Deutsche Bank also underwrote the first postcrisis multiborrower CMBS in Europe backed by two loans on retail and office buildings across the Netherlands.

Markus Kreuter, director for CRE origination at Deutsche Bank, confirmed that Deutsche Bank expects more deals and added France, Benelux and Spain among the markets that might see more CMBS activity next year. Italy is another market where, in the lights of Italian banks' negative results to the European Central Bank's stress tests, CMBS "is a product that can bring liquidity," said Mr. Kreuter.

For more news and information visit Blumberg Capital Partners.

Blackstone Grabs Las Vegas' Cosmopolitan for $1.73B

Deutsche Bank has struck a deal to sell The Cosmopolitan of Las Vegas resort and casino to Blackstone Real Estate Partners VII for $1.7 billion, which will be paid in cash. Deutsche Bank invested $4 billion in the resort it acquired after picking up the foreclosed property following the previous owner's default on a construction loan in 2008. The sale represents one of the biggest losses on a single project that Las Vegas has ever seen. A Deutsche Bank spokesman declined to specify the loss from the Cosmopolitan in a Wall Street Journal article, but the bank has reported €6.9 billion ($9.5 billion) in losses from noncore assets since 2012.

"The bank is committed to reducing its non-core legacy positions in a capital-efficient manner which benefits shareholders," Pius Sprenger, head of the Frankfurt-based lender's non-core operations unit, said in a statement today. The division is selling and winding down assets that Deutsche Bank doesn't consider to be central to its business. The Cosmopolitan opened in December 2010, but made net losses of $440 million over its first four years of operation. Other bidders for the property included Crown and a joint venture of TPG Capital, Apollo Global Management and Caesars Entertainment, according to people familiar with the bidding process.

"As a significant investor in the hospitality sector, Blackstone recognizes the value and potential in The Cosmopolitan as well as Las Vegas itself," said Tyler Henritze, senior managing director of Blackstone's real estate group. "This marks the beginning of the next chapter for The Cosmopolitan of Las Vegas, and the thousands of dedicated CoStars (i.e. employees of the property) who are committed to providing a compelling guest experience."

Blackstone's acquisition of the Cosmopolitan "speaks to a historically smart real-estate buyer making a statement on the length of the Las Vegas Strip recovery," said J.P. Morgan casino analyst Joe Greff in a report Thursday.

For more news and information visit Blumberg Capital Partners.

Colony & Woodridge Buy Ritz-Carlton Kapalua

Colony Capital and its affiliates including Colony Financial partnered with Michael Rosenfeld's Woodridge Capital Partners to purchase the Ritz-Carlton, Kapalua Resort this month. With acquisition financing provided by Deutsche Bank, the property was sold for an undisclosed price, but previous reports said that the hotel was expected to sell for more than $200 million.

Lehman Brothers Holdings, which had listed the 54-acre oceanfront property for sale with Jones Lang LaSalle last May, had planned to time the sale with Hawaii’s rising tourism numbers, according to a Pacific Business Times article. A joint venture of New York-based Goldman Sachs Group Inc. and Gencom Group bought the Ritz-Carlton Kapalua in March 2006 and renovated the property before defaulting in April 2009 on a $260 million loan from Lehman, as reported by Bloomberg.

"The combination of The Ritz-Carlton brand, a welcoming and nurturing Hawaiian culture and the nature and magic of Maui will make an unbeatable combination," said Thomas Barrack, Jr., Chairman and CEO of Colony Capital.

"We have great respect for the traditions of the islands," added Rosenfeld. "With its special character, remarkable location and precious natural resources, The Ritz-Carlton, Kapalua is a rare property that would be nearly impossible to duplicate today."

For more news and information visit Blumberg Capital Partners.

Equity Office Sells Two CA Complexes for $359M

Equity Office Properties has sold two of its business complexes located in San Jose and Sunnyvale, CA to two separate institutional investors. According to a CoStar report, the portfolio totals nearly 1 million square feet of space that traded for an estimated $359 million. CBRE's Joseph Moriarty, Mark Schmidt, and Bob Steinbock in San Jose represented Equity Office Management in the two deals.

Deutsche Bank's Deutsche Asset & Wealth Management (formerly Rreef) purchased Oakmead West, a seven-building, 431,490-square-foot campus near the intersection of Highway 101 and Lawrence Expressway in Sunnyvale, according to a deed filed Wednesday. In a separate deal that closed Thursday, KBS Realty Advisors picked up the eight-building, 615,233-square-foot Corporate Technology Centre, near the intersection of Highway 237 and Zanker Road in North San Jose. The property contains seven office/R&D buildings and one Tier III data center, according to a Silicon Valley Business Journal article.

For more news and information visit Blumberg Capital Partners.

Oxford, Crown Purchase Interest in Olympic Tower with $250M Wells Fargo Loan

A joint venture between Oxford Properties Group, the real estate arm of the OMERS Worldwide Group of Companies, and Crown Acquisitions Inc. announced a joint acquisition of a "significant interest" in New York's Olympic Tower. The JV purchased the interest in the Midtown property from Williston SA, a company controlled by the Alexander S. Onassis Foundation. According to a Commercial Real Estate Direct report, Wells Fargo provided the $250 million loan against the 500,000-square-foot Olympic Tower mixed-use complex on Fifth Avenue in Manhattan. The fixed-rate loan was used to refinance a $250 million mortgage that had been provided by Deutsche Bank earlier this year.

"The acquisition of Olympic Tower is consistent with Oxford's U.S. investment strategy," said Blake Hutcheson, President and CEO, Oxford Properties Group. "We seek large scale, world class mixed use assets with long term partners and we are very excited to join Crown Acquisitions and the Onassis Foundation in this exceptional opportunity. We believe in New York, We believe in this real estate and we believe in our partners."

Anthony Papadimitriou, president of the Alexander S. Onassis Foundation, said: "This partnership will enhance the positioning of our retail and office interests along Fifth Avenue and will most certainly add value over time. This transaction falls within our strategy of diversification of our real estate portfolio and I look forward to working with Crown and Oxford."

For more news and information visit Blumberg Capital Partners.

1290 Avenue of the Americas Gets $950M Loan

Vornado Realty Trust, a fully integrated equity real estate investment trust, announced this week that the partnership that owns 1290 Avenue of the Americas in Manhattan has completed a $950 million refinancing of the property. Reportedly Deutsche Bank, Goldman Sachs, UBS Securities and the Bank of China financed the loan with commercial mortgage-backed securities.
Vornado owns 70% of the property, while Donald Trump's organization owns the remaining 30%.

The Master Servicer and Special Servicer will be Wells Fargo Bank, National Association rated 'CMS2' and 'CSS2-', respectively, by Fitch. The net proceeds from the refinancing were approximately $522 million after repaying the existing loan and closing costs.

The 43-story, 2.1 million square foot office building is approximately 95% leased by 27 tenants as of September 2012, and owned and managed by affiliates of Vornado Realty Trust. 1290 Avenue of the Americas is currently undergoing major renovations, to include new turnstile access systems, and upgrades to the cooling tower, chillers, restrooms and telecommunications spine, and new tenant-proprietary back up generators.

For more news and information visit Blumberg Capital Partners.

Walker & Dunlop Arranges $93M in Financing for DC Chinatown Portfolio

Walker & Dunlop, Inc. announced this week that its subsidiary, Walker & Dunlop, LLC had arranged $93 million in financing for Norman Jemal for a portfolio of four mixed-use properties in Washington, DC's Chinatown neighborhood. Walker & Dunlop Senior Vice President, Capital Markets, Sandor Biderman led the Walker & Dunlop team according to a Washington Business Journal article.

Deutsche Bank provided $55 million in permanent financing for the 119,000 square-foot building at 800 F Street NW and the 35,000 square-foot property at 425 7th Street NW. The building located on F Street contains the International Spy Museum along with nine apartments and tenants that include Varian Medical Systems, Washington Media and Ziemba Waid Public Affairs. The property at 425 7th Street is comprised of a cluster of three-story buildings with office and retail space and features restaurants, Carmine's and Luke's Lobster.

RBS Citizens provided the $38 million in interim financing for 704-718 7th Street NW and 726-738 7th Street NW/702 H Street NW, totaling more than 100,000 square feet in several buildings. Douglas Development houses its headquarters in the space.

For more news and information visit Blumberg Capital Partners.